You can not just change the plug on the end from AUX to AUX/USB. At the very least, you will need the AUX/USB interface and associated cables as shown in this pic below. I assume this is what is included in the retrofit kit.

Option II would be to install an iPod only interface (not AUX/USB) which has a separate module and replaces the CD changer. I believe sits in the glovebox and also comes with specific wiring harness. This is not as versatile and costs just about the same.

I haven't done either of these retrofits, just going by what I was able to find. Maybe someone here has done it?? If I was in your shoes, I would buy the retrofit kit from roveractive on ebay. He's pretty good...

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2008 X5 4.8i - Jet Black / Black Nevada Leather / Specs: Every possible factory option