I was able to fix my issue - maybe it will work for you.
Technical details.
Iphone 5 and iPhone 5s
Kenwood Car stereo with iPhone USB support & iPhone Blutooth support.
iTunes Match with a rather large music library of about 15,000 songs.
I've never had any issues with either of my two iPhones connecting to this stereo via usb and playing songs in my library. After I applied the iOS 8 update, whenever I would plug my phone 5 or 5s into my car stereo, the stereo would just display a blinking "reading" light. I drove across town for 20 minutes and it never played music.
Here's how I was able to make it work.
Downloaded the IOS 8.0.2 update that was just released this morning...- 10/20/14 it's no longer an issue for me.
I normally never ever update to a new iOS until after apple has released the second update for it. Now I learned my lesson for downloading IOS 8 right off the bad. Should have knows better.