Same issue here (BMW X5, E70). I think the problem started with iPhone version 2.1 ... hard to tell. Before the sound quality was excellent via the original BMW bluetooth handfree set, now it is real bad: meaning the other party cannot here me (sounds very far away). - What I found out - and I found this strange - the volume level of the built in handfree set can be controlled by the volume control on the side of the iphone, not only over the volume control on the steering wheel. that means, that the sound level of the iphone and the sound level of the handfree set are coupled. Should not be that way! - In any case I have tried to set the volume on the iPhone to the hightest possible before making a call: So far this has produced better sound quality for the other party on the phone. I have only tried it two times so far, but it worked. (It is a temporary workaround; but not a good solution).