My Iphone 4 works fine with my 2009 1 series and 2010 X5D. One item I have found is the device needs to be fully charged to work correctly. The BMW USB does not have enough power to run a phone with a battery 20% or less. I am currently using IOS 4.1. Both vehicles have iDrive with navigation.

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BJKBerg

2010 X5d Vermillion Red, Sand Beige Nevada, Premium Pkg, Cold Weather, 3rd Row Seat, Tech Pkg, Trailer Hitch, Ipod
2009 128i Crimson Red, Boston Terra Leather, Premium Pkg, Nav, Heated Seats, Ipod
2008 X5 3.0si (Traded In)
2005 X5 3.0 (Traded In)
2003 325i (Sold)