I use Pandora and it works great. Totally portable solution.
Guitar (or bass) plugs in the gtr input, iphone plugs into aux input and output can be a headphone or plug into an amp. Pandora acts as a mixer. the new unit has a USB socket so you can record to a computer.
here is a demo : http://www.youtube.com/watch?v=l3Pc3swI7tk
Yverof