It will indeed. you get a female USB cable that you can plug the iphone cable in, with which you can get track information on your radio, plus track control.
it will also charge the phone.
You also get an aux cable, and bluetooth connectivity with the mediabridge, which can be switch to and from directly from the radio (using the track select buttons during the first couple of seconds after selecting the mediabridge via the mode button - don't worry, it's obvious when you actually use it!)
It WILL replace the cd changer, so unless you go down the route I have and hack it back in, you should treat either of these devices as a repalcement to the CD changer, rather than an addition.
2006 is the "odd" year.. you MAY need it, you may not.
The best way to check is to examine the plugs on the back of your CD changer.
if it's got two square plugs (one four pin and one six pin from memory!), then you've got the later version of DSP and do NOT need the adapter.
If, like me, you've got one square plug and one round coax cable, then you've got the earlier version of DSP and DO need the adapter.
(with that said, this actually might not be true for the older cars, as I know ALL standard z4 stereo's have active pins in the rear of the unit for cd changer in. which are used by the newer DSP system, and not by the older. When my DSP amp drowned, I switched to using these pins directly for my media bridge, and everything worked a-ok.. but obviously, without a DSP amp, I can no longer test my theory - so if you want to play safe and have the old system, get the adaptor

)