I've had a similar problem betwen the iphone 4s and the Kenwood DDX418. Before I got the phone my old non-apple phone connected fine to the Kenwood and I could make and get calls via the radio bluetooth. After I got the iphone (and possibly after the update to ios 5.0.1) I could still get calls in via the radio bluetooth but calling out and getting voice audio through the radio was extremely unreliable and patchy and virtually cannot be done now. After dialing the number I get a screen that shows three bars labeled: Kenwood (with the speaker icon), iphone, and speakerphone, and the bluetooth is grayed out even though it was on in blue just seconds earlier. The radio does not fade out but Pandora or itunes will fade out but I cannot hear anything from the phone once the call is in progress. If I switch to speakerphone I hear the phone converstaion through the speakerphone but I can't seem to make a call that comes through the radio speakers.
I have taken the unit to a Kenwood service dealer because Kenwood told me it was a firmware ungrade that only they could do but the service facility told me that they did not have any upgrades. They replaced the BT dongle and it worked in the shop but not when I put it back in the car, (well once in awhile but I can't replicate those conditions). I even swapped my iphone because the Apple tech thought that because the spinning icon next to devices in the BT menu never stopped spinning when connecting to any BT device, it was a problem with the phone.
Kenwood said they would "look into it". Anybody have any suggestions.