So I did a little more troubleshooting and it seems it is the data on my phone causing the issue.
My wife's iPhone 5, my old iPhone 4, and my replaced iPhone 5 with nothing on it (ios 6.1.3) works fine, pairs and can read the phone book of test names.
But when I do a restore of my data, it no longer works.
I have deleted or corrected every entry that has a special character. I have deleted the pairing on both sides and reset all settings multiple time. No idea what it is about the data on the phone is causing this problem, but it sucks.
I have an 09 with CiC, so I can't update the car Bluetooth software, correct?
09 Space Gray E90 M3 DCT: BPM (Stage 1, DCT and Servotronic) tune, Gintani Sport Exhaust, Dinan Intake