the standard "factory kit" is useless on an ipod and original iphone. you have limited control of 5 playlists.
I have that kit and did use it with an ipod and original iphone. however now my new iphone 3G wont work with it, it says "not supported accessory", as apple changed the way it charges the iphone, and the VW kit uses the firewire terminal, which is no longer supported with the new iphone 3G.
depending what phone you have, its crap both ways.
there is a new SDI connector coming out, but im not sure it supports the new iphone and its about £300.