Since this is an old thread, here's some info for anyone still fishing about;
I upgraded the head unit on our '02 NA spec Freelander without any difficulty, while maintaining steering wheel functionality. Here's a quick how-to (with parts list):
1) Buy new stereo! I chose a dual zone JVC unit with DVD/MP3/USB/etc playback that I also ran to rear-seat headrests.
2) Remove stock HU. Easiest way is with a metal clotheshanger. Cut off the head of the clothes hanger and cut the base in two, giving you two "U" shaped bits of metal. Insert them into the front facia holes of the Freelander stereo and it'll pop out a bit - pull out with your fingers.
3) Make a harness (if your stock stereo doesn't fit; Freelanders use some sort of ISO plug that isn't as commonin the US, but blaupunkt's and several others fit in). I used a VW interface plug (5-15 dollars at any stereo store) that fits late 90s VWs. There's a wiring description on the back - note that the constant and switched power lines are reversed! Solder (and heat shrink) the leads from your aftermarket stereo following the wiring directions on the packaging.
4) Get an external antenna "booster" if required. The Freelander has a booster for the antenna built into the head unit - my aftermarket JVC didn't, so I bought and inline booster ($10 - local audio shop) - wired the power to the "switched power" in the harness from #3, and plugged the antenna into the booster - works great!
5) Find a PAC controller for your steering wheel stereo interface (if you are in the US/Canada) - probably better options abroad. I bought a PAC-SWIALP (I think) which controls Alpine, JVC and a few others. There are wiring directions on the packaging - solder this into the harness from #3 (3 leads to solder, as I recall), and snip a couple of the loop wires per the directions from PAC.
6) Plug your harnesses, and put the unit back into the dash - complete plug and play once you've soldered your harness!
7) Follow directions for programming the steering wheel controls - this involves turning on the accessory power with your keys and counting a bunch of red flashing lights on the PAC unit after pressing a small button on the side of the unit with a pen. Easy to do - just follow the instructions. You can choose to map your steering wheel buttons to many different stereo functions, but I stuck with the track up/down and volume up/down. Note that I occasionally experience a half second delay when changing tracks, or if I flip the switch really quickly, it won't change - I did need to readjust to holding the button slighlty longer. I'm guessing that I could have fixed this a bit by reprogramming the unit, but it didn't bother me much...
Note that I was also able to go back to stock (to recover a CD from the old HU) after 2 months and was not locked out of the stock HU - surprising!