Make a plan
Before you start turning the screwdriver and ripping into your dashboard, set aside time to plan out the entire installation process. It wasn't until I was looking at a colorful fistful of stock radio wires--with no wiring diagram for reference--that I realized my confidence--er, haste--wasn't going to get me anywhere (it turns out that the 50 feet of speaker wire I assumed would be more than enough for a tiny Mustang, is about three feet short when you finish all the splicing, meaning I had to rerun all the wiring.
I'm not kidding about this. If there's one piece of advice you have to follow it is this: Read through each component's instructions to create a master installation plan. Know what you have, where each piece is going to go, and what extra tools it will take to connect everything. Make sure that you're confident that once you pull apart your dashboard you'll be able to fit it back together. Check literature about your car to make sure you don't need extra adapters such as a custom radio faceplate, or, especially with older or imported vehicles, to make sure there are no non-standard components behind the radio (such as a separate amplifier buried deep within the console) that might greatly complicate the process. Finally, get a big piece of paper and draw a diagram that details where every wire will run. This will organize your thoughts and uncover any potential problems.
In addition to all your new equipment you're going to need wire cutters, black tape, crimpers, pliers, screwdrivers, a rubber mallet, a drill, a Dremel, a ratchet set, flashlight, wire tubing, double sided tape and wire tires to get the job done.
STEP 1: Replacing the Head Unit
When purchasing a head unit (the in-dash radio that controls your system), make sure you chose the appropriate size for your car. Head units are sized as single-din (a 180 x 50 mm panel) or double-din (180 x 100 mm panel) and you can often purchase an adaptor plate to fit a single-din unit in your double-din vehicle. The opposite was true for my car: I installed a double-din 7inch touch screen head unit, the Kenwood DDX-6019 available at www.Kenwood.com. Keep in mind that depths, although largely standard, could vary, so pay attention to how much space you have.
To make the installation much easier, you should also purchase a wire harness designed specifically for your vehicle's make and model. This will save you from having to cut any wires inside your dash, and, trust me, that's well worth the $20 you should expect to pay for a harness. Before you begin to disassemble your dash, you can splice the new wiring harness to your new radio by matching wire colors and descriptions. Also attach Kenwood's add-on Ipod control interface (KCA-iP500) and navigation system (KNA-G510) following the product's simple instructions. Once the harness is connected, the rest of the job is plug-and-play. You can find the correct harness and instructions at www.Crutchfield.com.
Armed with your master plan, carefully remove the dashboard components surrounding your radio by removing any set screws or hex bolts securing the fairing and carefully pulling the component away from the vehicle. You should see a couple of set screws holding in the stock radio. Remove these, and slide out the old head unit.
A confusing collection of colorful wires should follow the stock radio. Disconnect these by carefully prying apart the wiring harness connection that connects the stock radio to the vehicle. The harnesses can be tough to pull apart, but with some wiggling it will eventually separate. Disconnect the radio's antenna connection and set the old head unit aside (don't throw it out--if you want to keep your new system when you sell your car, you'll eventually need to re-install the old radio).
I decided to install a Parrot 3200 LS-COLOR hands free kit, which is best done when you're reinstalling the radio head unit. This connects my bluetooth cell phone to the sound system. I can hear calls through the speakers and talk using the supplied microphone. It auto-mutes the music when a call comes in, and it interfaces with the head unit via another wiring harness, making installation very easy.
Next, connect the antenna cable, and slide in your new head unit. But before you start screwing the radio into place, turn on the car and test your connections. If you don't get any sound, or the radio refuses to turn on, or the sound is reversed (right speakers play the left track, or the front speakers play the rear track, etc.) the culprit is likely a faulty splice in the wiring harness. Pull out the radio and recheck your connections.
If all you're doing is swapping out you radio, follow your system's instructions to fully secure the head unit and put your dashboard back together. You're done. Enjoy your new system.
Tips
Here is a close up of the after market harness(left) and the radios harness(right).