When plugging in your iPod into the Front Aux, do not use a 3.5mm to 3.5mm cable directly into the headset jack on the iPod. The sound quality out of the 3.5mm on the iPod is only good enough for headphones, not for a stereo system. Instead, use an adapter that plugs into the iPod's main connector with a 3.5mm plug in built into it. When you do this, 100% of the audio control is now managed by the stereo system itself. (Your iPod audio settings are outright ignored, which is a good thing when plugging into a stereo.) I use this charger/iPod interface cable:
Monster Cable. I've been using it now for a couple of months with no issues.
The quality of the 3.5mm to 3.5mm cable also affects the quality. I'm using this cable, but don't necessarily recommend it: Belkin 3.5mm. I bought this at the Apple store, but now that I see the online prices I wish I waited.