I've found the answer to my own question and thought the following information may help other people in the future.
There are a number of options available on the market today. From a simple FM transmitter to a fully integrated solution which will also charge your iPod, and allow you to manage it from your multi function steering wheel (MFSW).
Here is a summary of the main options and their features.
Basic solutions:
FM transmitters basically allow you to tune in to a radio station and broadcast your iPod to it within your locality. They offer poor sound quality and are also illegal in many European countries. A popular model is Griffins iTrip. http://www.griffintechnology.com/products/itrip/
AUX in is a simply kit available from your BMW dealer which will allow you to connect any device with a 3.5mm output. Quality is better than an FM transmitter but unfortunately the iPod only offers a line out signal on the doc connector.
This is the best option for non iPod music players.
Please note that the Aux in offers no iPod control functions. You will need to select tracks and playlists etc directly on the iPod.
The BMW product ID is: 65 12 0 153 502
BMW indicates the installation should take about 1.5 hours. It would be wise to double that for a non BMW trained technician.
Integrated systems:
BMW OEM solution
This official solution from BMW will allow you to control your iPod from the multi function steering wheel MFSW. You need to assign 5 BMW playlists in iTunes which the interface will pick up. You then select the playlists by using the CD changer select button. Note: You will loose the use of your CD changer with this kit. Your BMW dealer would need between 1 and 2 hours to install it.
The system offers improved audio quality as it uses the line out on the iPod dock connector. It will also charge your iPod when connected. It works with all iPods using a dock connector interface.
For the instruction manual check out the following link.
http://ipodyourbmw.com/Pdf/iPod_Owners_Manual.pdf
The kit is designed for all BMW Z4?s with either the standard or HI-FI system with 10 speakers.
At the end of 2005 BMW launched a second generation kit which offers the same functionality but will work with cars equipped with BMW Professional navigation. Sadly the BMW kit does not support cars with the BMW HIFI Professional which includes DSP.
The BMW product ID is: 65 11 0 409 342
BMW indicates the installation should take about 0.75 hours. It would be wise to double that for a non BMW trained technician.
Official BMW installation instructions can be found here.
Fully integrated solutions:
These solutions provide more functionality than the BMW OEM Kit. For example the two leading options include the ability to move through all your playlists. You are not limited to 5 as is the case with the BMW solution for the Z. Like the BMW kit you will loose the use of your CD changer.
Dension IceLink Plus http://support.dension.com/dension/icelinkplus.php
Dension is the established player in the market and was the first to offer a viable solution for a broad range of BMW models. The IceLink plus is the most popular model for the BMW Z4. Newer models are available with significantly enhanced feature sets like the IceLink Gateway500. Unfortunately this model only works with BMW?s using the iDrive system.
The system comes with 2 mounting options. A cradle which is externally mounted or a cable solution. The advantage of the cradle is that you can control the iPod directly. Cradles are iPod model specific. The cable allows you to hide your iPod in the glove box and is not iPod model specific.
The operation is simple: IceLink Plus translates CD changer messages to iPod controls and switches the iPod automatically on and off as you select/deselect the CD changer source.
The iPod is controlled from the head unit?s CD changer keys and MFSW controls. If you have a navigation system you can also use the scroll wheel to navigate which is much faster than the track buttons.
The iPod is charged while connected. 3 charge modes to select from and help conserve long term battery life:
1. Charge all the time (That's bad for the iPod battery anyway)
2. Charge when playing, it cuts power when the ignition is turned off.
3. No charge
You can control:
1. The first 5 playlists (the sixth button is used to access the Ice Link menu)
2. You can browse all playlists with the MFSW
3. You can also activate the albumplay mode (Plays the album of the song you are listening to)
4. You can browse for artist and album as well.
The Ice Link Plus is available for all Z4?s but you may need a special digital to analog converter adapter if you have a car equipped with the HIFI Professional system.
For cars with the standard Business Radio CD player, or the Professional Navigation (Including those with the Professional HIFI (Carver)) system, the standard BMW Ice Link Plus kit is all that?s required. The installation is performed directly at the back of the head unit. A detailed installation guide can be found here. INSERT LINK TO PDF.
For cars which have the Professional HIFI (Carver) system but no BMW navigation a separate digital to analog converter needs to be used. The installation of this kit needs to be performed using the original CD changer cables in the boot of the car and not at the head unit. The kit can be purchased here at http://www.europeanautosource.com/product_info.php?manufacturers_id=&products_id=230
DICE http://www.diceelectronics.com/
The DICE kit is a relatively new entrant to the market and was developed by the form American importer of the Dension products. It?s a little cheaper and offers a similar but slightly different feature set.
The IceLink Plus the DICE iPod integration kit will display text from your iPod onto your Z4?s radio/Navigation display allowing you to view Artist, Song title and Album name.
In addition to the information it is also possible to make the following:
1. Album Selection
2. Song Selection
3. Playlist Selection
4. Chapter Selection (Audible/Audio books)
You can browse your iPod with the steering wheel, radio or Navigation buttons and the iPod (or any combination of the three) without booting into separate modes. Allowing the iPod to remain in "iPod UI" allows for you to still rate songs and create "on the go" playlists.
You can browse your iPod with the MFSW, radio button and directly on the iPod itself. With the IceLink Plus it?s necessary to select the iPod UI from the iPod it?s self it?s permanently available.
The DICE has another stand out feature. A selectable AUX in. You can?t use both at the same time but it does allow you hook up a non iPod device like a CD player or portable game machine.
Both cable and cradle options are available
