I use something like this:
3.5mm M-F Stereo Audio Extension Cable with Microphone Built-in (78CM-Cable) [E16021] : BestOfferBuy.com, Buy DVD, Shop for PC accessories, Discount MP3 Players, Bargain Deal for Surveillance Equipment, Cheap R4 for NDS, X-sim Unlock
I am not affilated with this company.... You plug this in your phone, and plug the fm transmitter into it. It has a mic, I listen to the other party on my car speakers and they have no problem hearing me. I have found that some of these are working different with different versions of Android, The one I am using now takes two clicks to answer. You can of course use something like Vlingo In-Car app (free). Hope this helps.