The stock system is surprisingly good, and a simple head unit change for something more modern is the way I went for my first 2 XMs.
For this one, I've done an upgrade of everything with a Blaupunkt DAB head unit, Blaupunkt amp, Blaupunkt active sub, crossovers on the front speakers with upgraded tweeters and woofers, and upgraded co-axial's at the rear. The Tomtom iPhone kit is permanently wired in (all hidden), as is the Nokia 616 car kit.
The reason for all this tinkering is threefold I suppose:
1) I used to work in audio professionally
2) I used to work in IT professionally
3) I'm pretty naff at fixing the other stuff on cars (no tools and less confidence) so it's my attempt at making up for it