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You're correct. I have the Avic D3 and you need to pull out the Audio/Video CD to put in the navigation maps but for $699 I thought it was worth it. You can use the iPod connector and run the iPod and Navigation at the same time. The navigation voice will pause the ipod when speaking and go back to the music. If money is no option, get the upgraded D3 - if you want to drop in a decent head unit, door subs, cheap amp for about $1K, go with the Avic D3. I put in JL Audio 6.5 subs in the doors and they sound great.
Good luck,
-Steve
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2001 Boxster S
Desnorkled
Pioneer Avic D3
JL Audio 6.5 inch subs (in the door)
Pyramid 4 channel amp
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