If you've updated to OS4 you may be experiencing some difficulties with your iphone and aftermarket equipment-this isn't just car based products but all iphone accessories!
The reason for the issue is Apple changed the software from the spec they'd told all of the other manufacturers to work with!
To remedy this, until Appple release a new update that gets everything working properly again, there is a tempory fix:
You have to plug your iphone into your stereo before doing the re-set and it should allow you to use your iphone with your stereo. Do not select "airplane" mode and ignore any error messages.