I can't vouch for the package 9 model (the in-dash changer) but the single-disc model does *NOT* play mp3s. (I seem to remember seeing a rant about this from a package 9 owner as well, so I doubt that one does, either.)
I put a MP3 play in my 95 Blazer and when I go fishing i can drive up to 5 hours to get there.
I can put 1 mp3 disc-- 5 hours play time-- and never change it.
Now I only have 10 MP3 disc's in my truck. not 300. Kinda cool. eh.
I just wish toyota did it for my wifes new car. Only 20 more weeks to wait.