i believe android is a good platform for a in car infotainment system, it still has it's own advances to make but the android platform is great because it is open source, unlimitedly customizable, and by my standards very stable with the appropriate hardware.
as far as navigation goes most devices support a internal GPS antenna and the stock google navigation software is wonderful and always up to date and FREE! but if it's not your cup of tea there are alot of different navigation programs you can download off the marketplace which has pretty much anything you can think of and alot of free options.
If your device doesn't have a built in GPS antenna (hard to find in 7" tablets) you can use pretty much any bluetooth GPS reciever with it, or you can even tether GPS off your android phone if you have one.
i don't really know of many USB devices that android supports as far as peripherals and memory but almost any device has expandable memory via SD card and most support a variety of bluetooth peripheral devices.
honestly this is my choice for my next infotainment project simply because i fell in love with android since my first android handset. i think it will be more and more supported in the mobile community with time. there are already alot of great mobile apps for it.