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This question is in the wrong forum so you may find better answers over in the iDrive/Nav forum but...
I have had no problems using my iPhone 4S. I have a BMW cable the dealer gave me ($80 retail but cheaper on ebay); however, I was also able to pair it with bluetooth and still control it through the iDrive but not with as many functions available when using the Y cable that connects to the iPhone dock and then splits out to USB and 3.5mm jack which connect under the armrest.
I was also able to connect it with just a standard apple USB/dock connector but the sound quality was no good so I am using the BMW Y cable described above. The best option is the $235 snap-in adapter to use with the iPod/USB adapter ($400 option 6FL) I also have BMW Apps ($250 option 6NR) but due to sticker shock of also having to purchase the separate iPhone 4 snap in adapter I have not yet tested the added level of integration that it is supposed to offer.
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