Ok. Now we're getting somewhere. You can't hook up and operate the iPhone/iPod with a standard USB cable. You have to have a special cable (link below). You can however stream music using Bluetooth. You can't control the iPod that way, but you can play music anyway.
Kenwood - KCA-iP301V
I'll check mine out tomorrow evening to make sure that cable works properly with the iPhone 4 before you spend your money.