FStream is a really neat streaming radio program for the iPhone. Although it supports various WMA streams, I found that it did not successfully work with some of the Australian ABC WMA streaming radio services.
The most reliable method seems to simply use a low-bandwidth MP3 stream over HTTP (24 kbps sounds fine and works great even over Edge). I could find a number of other blogs, etc. with static methods for streaming, but nothing that reliably did on-the-fly conversion of an incoming stream.
My solution is simple Python HTTP server I'm calling stream2mp3. It uses mplayer, lame and a few pipes to take the incoming stream (which is pretty much anything mplayer can handle, which is pretty much anything unencrypted) and spit it out as a low-bandwidth MP3 stream over HTTP.
It seems to reliably handle dropped and closed connections, and clean-up after itself. I'd certainly be interested in any bug fixes or suggestions. I guess the major disadvantages is you need a dedicated server (get yourself a linode!), it only handles one connection at a time, and if you want multiple stations I guess you run multiple instances on different ports.
With this, you can be sitting in traffic on the 101 heading to San Francisco and, with some local radio, it's just like you're sitting in traffic on the M2 in Sydney! Here's a screenshot:
~/bin$ python stream2mp3.py Creating WAV fifo /tmp/incoming.wav Creating MP3 fifo /tmp/output.mp3 Serving <mms://media3.abc.net.au/702Sydney> on port XXXX mplayer running as 8524 lame running as 8525 mobile-XXX-XXX-130-107.mycingular.net - - [23/Dec/2008 18:59:22] "GET / HTTP/1.1" 200 - [radio plays until I stop it...] connection lost cleanup complete, ready