full functionality restored
Seems like Apple has fixed whatever problem my iPhone4 was having connecting to my 2010 328i (no iDrive).
After an iTunes patch, I've found that I can now play all my music once again using just the original BMW supplied Y-adapter (USB and AUX in the center console). Not only that, but the other apps (besides phone and ipod functions) are now accessible via iPhone even while connected to the car.
The iOS software on my phone is now 4.1 (8B117)