Thanks shawnsheridan for your detailed reply.
From the BMW documentation that I had read it inferred that you must have a Snap-in adapter to use the Video and BMW apps but I now believe that these using the newer cable with the correct options installed on the car these work without the Snap-In.
My new car is now in the UK so should only be a few days before I can try it all out.
What I have been trying to determine is what I need to buy to enable all the features.
But I don't want to buy an iPhone 4 £161 Snap-in (in which the iPod doesn't fit properly) when all I need is a £40 cable. I'll see if the dealer has a cable that I can test it out with.
I believe the best solution is to have a different mobile connection for the iPod running the Web Radio or Facebook etc from that of the mobile phone because if you are in a 2G reception area as opposed to 3G then the data connection on your phone makes the phone engaged - that is anyone calling you will get transferred to answerphone. So IMHO installing a Mi-Fi in the vehicle to supply a wi-fi for the data would be the ideal solution. Also without a separate data connection if you are talking on the phone in a 2G area you will lose your data connection to other apps.
There seems to be a lack of authoritative information on this topic and the dealer does not seem to understand it either.