Happy to say I made my decision... and it still makes use of the TomTom iPhone carkit, but not as the music source
I bought the XCarLink interface: Fiat/Alfa Romeo iPod Interface*::*FIAT/ALFA ROMEO*::*XCarLink
This had one good report from someone here, and it's cheaper than the Dension while doing about the same thing. (During the checkout, the price fell to under 60 pounds - 77 pounds including delivery halfway around the world!)
When you check the compatibility chart, for the Alfa 156, the Dension doesn't provide the song name on the head unit's LCD.
The XCarLink presents the iPod playlists as 'CDs' in a CD changer. But with disc 1 selected, the iPod provides direct control as well as the steering wheel buttons (and head unit buttons). That's what I want, to be able to find the right track with the iPod's clickwheel.
The next step was to buy a nice second-hand iPod Classic 120GB in silver (aluminum front) which will look great mounted on the 156 (facelift) dash. I shall probably use double-sided tape to stick it over that horrid clock in the centre.
Because the iPod is second-hand and only three months old, it's half the new price, yet is in like-new condition. And that is such a huge capacity! I have about 12GB of MP3s which was more or less on the limit for my iPhone (because I bought the iPhone 3GS second-hand too, that has another 12GB of someone else's music
That means the iPhone now only has to perform the purposes of navigation and phone calls (I don't have to use the touchscreen or the controls of a new head unit to select music on the move) so the TomTom carkit, provided with its own power supply in the roof console, will suit fine. There is no point in hooking up the 3.5mm audio from the carkit, since only the voice instructions come through the stereo (not phone calls).
I did consider a new head unit but it still has to get its music from somewhere, so really still needs the iPod, plus an interface to connect the steering wheel controls, and there are potential problems with connecting the Bose amplifier (line level too low, speaker level too high). Therefore, no advantage except (if Bluetooth) possibly the ability to make phone calls without using the TomTom carkit. I still don't think any head unit looks as good as the original with its flush-fitting silver-painted front and red-illuminated dark grey buttons. It just looks more modern, somehow.