Our intercom isn't as fancy as yours (actually, it might be, but I don't have it hooked up that way) but 1) I don't use ATC much when flying VFR. And that's when I need Traffic alerts the most. So there's rarely an audio conflict in that scenario; 2) God made ears pretty smart. You can "focus" your ears to pick out what you want to hear. In our plane, we have a Monroy PCAS wired to the overhead speaker. We can spatially distinguish the traffic warning from it from conversations with ATC.
In fact, we have a voice annunciator circuit I wrote about in KITPLANES years ago. We pre-recorded Warning messages onto a chip and precede them by two quick "ding-ding's" to get your attention. It comes over the Intercom, same as ATC. Even so, it's amazing how well that gets your attention in a cacophony of noises. 3) Even if there was an audio conflict, I would rather have an audible traffic warning and miss a call from ATC while I'm looking out the window from traffic rather than have me looking down looking at a screen for traffic.
If audio conflicts were really an issue, iFly could offer both a male and female voice ( like many automotive moving maps offer), so that, if ATC was a man, and having iFly talk to you in another man's voice bothered you, you switch to the female voice on the iFly. If nothing else, that would be a cool Marketing thing. (Could also offer accents. Perhaps iFly could use the already existing text to speech voices available on the Internet. Extra cool.)
And last, if I understand it correctly, the ultimate purpose of Free Flight is to eliminate air traffic controllers. (Their Union.) Or to greatly minimize voice communication in the cockpit with fewer controllers. Already several commercial carries are using digital DataLink to communicate. (And really, on my average IFR flight, 80% of the conversation is frequency changes.) So if things go according to plan, the cockpit will be sterile someday. Except for those playing Ted Nugent in the background, iFly will be the only thing talking. In fact, iFly could play "Pilot-Navigator" on us with verbal warnings like "You're drifting left of course," or "I've lost the GPS signal, Dave," etc. (The HAL 9000 reference really cracks me up. :-) )