On Mustangs of years past a funny odor always seems to develop in the heating & A/C system. This is partially remedied in the 05-up Mustang with the addition of a factory installed cabin air filter. I say partially because the filter does require regular maintenance or you may end up with that funny smell anyhow! The link below is to a blog written by LRS salesman Jeff Jimenez & shows how to install a cabin air filter as well as a comparison between the new filter & his 1 year old factory filter.
Mustang Cabin Air Filter Replacement
Mustang Cabin Air Filter Replacement