Had a similar problem on my Z3 once. Gave it a few bashes (well more like taps I suppose) and eventually got it out. Someone told me to always put 6 discs in it and never use it with with any empty slots.
I never had any more trouble with it but I did sell the car a few months after that anyway.
There'll be a few members along soon to suggest a Dice/Dension/Intravee solution to hook up your iPod. You can get compatible changers off Ebay but you need to remove quite a bit of trim to get at it. Looks like a good few hours but nothing too tricky involved.