Yes, it does play MP3..
However, this is how it works:
1- Set Navigation Destination
2- Remove NAV CD
3- Insert MP3 CD
If you change the NAV DEST. you have to re-insert the NAV DISC.. or just plug an ipod/zune

Then you won't have to change the cd.
It's the cheapest out there..
AVIC-D3 or AVN-5500 (Eclipse - Doesn't support DIVX.)