updated 07:45 pm EDT, Mon September 13, 2010
USB output affected across makes, models
The recent iPhone and iPod update to iOS 4.1 has created quality problems with built-in car audio systems that owners describe as "scratchy, crackly" and bringing periodic micro-dropouts, according to reports on various sites including Apple's own discussion forums. The problem seems to affect several different makes of automobile and models of iPhone and iPod Touch that are connected to various receivers via USB.
Reports across sites vary but seem to indicate that Bluetooth streaming or audio coming out of the headphone port is unaffected; only iPhones or iPods connected by a dock and running iOS 4.1 seem to have the problem (which didn't happen under iOS 4.0.2).
The leading theory among users affected by the issue is that Bluetooth activity is somehow affecting the USB audio; some users report that turning Bluetooth off or switching to airplane mode alleviated the problem, though it's unclear if that eliminates the issue or just reduces interference-related noise.
Reports confirm that switching to Bluetooth or headphone-jack based output is a workaround that eliminates the problem.
Apple has thus far not commented on the issue, or indicated it was working on a fix. The company expects to issue iOS 4.2 sometime in November.