My car worked fine with my 1st gen iPhone on the 1.1.x software, worked fine on the 1st gen iPhone with the 2.0.x software, and still works fine with my new 3G running 2.0.1 thru 2.1.
No audio echos. Phonebook is synced correctly. Very pleased with the functionality.
2006 BMW 330xi with iDrive and Nav. No firmware updates to the iDrive system since I took delivery.