You'll need the BMW supplied cable to get a full feature set on your iPOD.

I've got the latest SW version but it has made no appreciable difference to the iDrive performance.

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Fastbuck
2008 E83 BMW X3 2.0D SE Montego Blue/ Black
2007 E70 BMW X5 3.0D SE Space Grey/ Beige
2006 Land Rover Freelander Sport TD4 Zambezi Silver/Black - SOLD
2005 W203 C200K Sports Coupe Jasper Blue/Artico Black - SOLD
2004 W211 E320 CDI Avantgarde Brilliant Silver/Alpaca Grey - SOLD
2001 E39 BMW 530i SE Crystal Green/ Beige - SOLD