I just picked up my 2007 X5 on Saturday. There is an aux input located in the center console. From the iDrive Entertainment screen, you can select aux input. Although BMW announced a new interface for iPods, it is not in the 2007 X5. Therefore, playlists, tracks, artists, etc. do no show up on the iDrive screen. You control the iPod itself to make selections.

There are two options for connecting your iPod to the aux input: (1) a mini stereo cable connected to the iPod headphones output; or (2) a cable with an out line feature that connects to the iPod dock connector. The problem with option 1 is that, although you can increase the volume using the car's volume controls, the output from the iPod is not strong. Therefore, you have to crank up the volume on both the iPod and the car. If you switch to a different audio source in the car, make sure you've first turned the volume back down.

There are two products that I have read about for option 2: (1) the Sik imp; and (2) the SendStation pocket dock. Both connect to the iPod's dock connector and take advantage of the line out feature of the iPod. You then connect a mini stereo cable from the device to the aux input in the car.