Found a link at another forum that mentions initial beta issue that has been reported.
I like to hold off on the update till the release version has been used for week or so...
iOS 5 breaks Bluetooth contact syncing in VW's
Looks like bluetooth issue.
I have to plug my iphone (ios 4.3.5) once I've started the car or else I get no ipod sound! Ipods seem fine to be kept plugged in.
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