My experience for connecting my iPhone 5 into my '03 E39 follows: This was a simple $40 installation (dealer purchase), allowing me to plug-in the iPhone headphone jack using the car's AUX input. The sacrifice is not having integrated charging or iPod/iPhone control through the factory unit. I was ok with not having either of those options.
I made a slight mistake locating the AUX input jack. BMW instructions show a glove box location, but I wanted mine next to the cup holder. Since the cup holders are shot anyway, I'm not too worried...
Enjoy the pictures and any feedback or questions would be appreciated!

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severe530i F.K.A. BMneWbie-530I

"'Tis nothing good or bad, only thinking makes it so."
-William Shakespeare