I've got a Pioneer 8400BT installed in mine, sounds a lot better than the standard Audi headunit (night and day difference!). If I remember right there's 2 different wiring harness's for them, one if you have the Bose speakers and the other if its the standard speakers. The Pioneer headunit needed an aftermarket cage too that slotted into the existing double din slot in the dash. It was a user on here by the name of 'Ash187' that helped me out fitting mine!
I'm sure there's other good headunit's out there, the Pioneer one suited me nicely as when used with the iphone cable it reads all the songs and also displays GPS apps on the screen. Don't be fooled by the 'RNSE or nothing!' attitude that some people have, aftermarket ones have some nice features the only downside being they don't tie in as nicely with some of the cars features (Phone button on the steering wheel for example).
You probably could, but you also need the fascia plate to clip over the front to fill the shape of the standard headunit otherwise it will look horrible! I bought a kit which included the facia and an adjustable cage with allows you to set how far in or out you want the headunit to sit, so you can get it sitting flush with the dash if you like.
Here's a couple of pics:
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I have my iphone cable running into the area from the ashtray delete I fitted. Much nicer than having the ashtray there!
I prefer it sticking out a bit to be honest, suits the contours of the unit better IMO and makes it more of a center piece!Mate you really need to get that more flush!