Things have changed in these post-iPod days, but applications are still available that mimic this rad feature. One such iPhone/Touch application is Playlist Alarm Clock from Chillix...
Just tap on the Sleep or Wake areas of the screen and the panels will slide open, switching those functions on and allowing you to set up your playlists and configure your options.
Sleep: choose your playlist then decide how long it will take for the music to fade out. You can choose as many songs as you like. If you only choose a few songs to listen to, P.A.C will simply repeat them as required for the duration of the time you’ve specified.
The progress bar shows at a glance the time period you’ve chosen and how far through it you are.
Wake: set the time you want to wake up and how long you want the music to fade in for this time in seconds rather than minutes). You can also choose to activate the snooze function.
Plug this into a stereo dock and you could start your days off on the right side of a soundtrack.
The application is $1.99 from the iTunes store (iTunes link).
What would be your ideal wake-up soundtrack? Ours would include Van Halen's "Panama."