I've gotten around this by manually adjusting the start-time and stop-time of each individual track. I put together a dance mix. Crossfading makes it great in iTunes, but the pauses on the iPod were awkward.
What I did was clip the stop time of each track. Then with the start times starting very crisply also, the pauses are minimal. Not perfect, but I think it's the best we can do right now... 'til Apple brings cross-fading to the iPod.