Originally Posted by jphughan
Correct. You can still use a Y-cable if you want to (though it shouldn't have been included with the car itself unless the dealer mistakenly threw it in), but you wouldn't want to because digital audio over USB will sound better. And actually, it might be working that way even if you use the Y-cable unless you explicitly select Aux in iDrive. Just replace it with a standard white cable.
So If i plug my standard iPhone 5 USB into my car it should play over USB? If true that's awesome.
I have been using my iPhone 4 cradle to date, but have noticed that the Y cable produces clearer sound? Could this be related or just perceived? At the moment as my iPhone 4 cradle broke anyway I have been using my old iphone 4 plugged into the Y cable as a dedicated music device.
i was planning to grab an iPhone 5 media cradle as soon as one comes out though.