I also am having the same problem with the constant connecting and disconnecting but I'm using my iPhone4S. I thought that it was the cable, which was an old cable that I have and is falling apart so I bought a nice new black USB cable last night and was testing it again, but it kept connecting and disconnecting.
I am thinking it might be a problem with the way that the phone is sitting in the car. I just have it sitting in my cup holder and haven't gotten a mount yet. So now I'm trying to figure out a good mount setup but am having no luck. I like the Pro-Clip mounts but I want one that goes on the lower console and goes on the drivers side of the console. I have ascertained that mounting the phone on the air vent will block my view of the Nav screen unless I put the mount on the far side of the screen (on the passengers side). So I'm still trying to figure this one out and hoping that the the disconnecting/connecting issue via the USB cable will be solved. Rich people problems I tell ya! Lol!
Also before anybody suggests. I did try to download some music via a USB stick into the M5's onboard hard drive last night also. I learned that the music that is stored on the M5's hard drive does not use any folders that you create on the USB stick. Or basically I couldn't get playlists that I created to transfer over into the M5's hard drive. Now there are only like 3 playlists that the M5's "Music Collection" will let you access. One of them is one called "Favorites" and you have to select each song individually and designate it as a "Favorite" in order for that song to be put into that playlist. My beef is that you can't create any custom playlists on the M5's hard drive. So you basically either have to scroll through your entire music collection sequentially (which is rather easy actually) or you can use that "Favorites" playlist. My thing is that I organize all of my music by playlist that way it's easier to access what I want to listen to. This is where the USB connection to the iPhone or iPod is nice, because you can use the iDrive to navigate through your playlists. I will say the search function of the "Music Collection" on the M5's hard drive looks promising but I have yet to explore is functionality more. So what I ended up doing was throwing the music that I listen to the most on to the hard drive of the M5 so that way it's not thousands of songs that I have to sift through to find what I listen to most anyways.
Also I noticed that the M5's hard drive is capable of playing Podcasts. I downloaded a Podcast on to the M5 and it didn't work. I couldn't get the iDrive to recognize the Podcoast. Lame. Maybe I'll figure it out one day.
I would also like to say that last night was the first time that I really started to explore the quality of the music with the Bang and Olufsen sound system using the USB cable to my iPhone4S, regular music CD's, and music stored on the M5's hard drive. I have to say that the sound quality is more impressive via these mediums compared to Bluetooth and even XM Radio. I also tested streaming Pandora with my iPhone and through the USB cable and the sound quality was equally impressive with the B&O system. I was pleasantly surprised by this. The regular music CD's sounded the best, but that is obvious since it is the highest fidelity. All in all though, the B&O system can make any method of streaming music to it sound good, but I would have to say that in my opinion here's how I rank the quality:
Best 1. Regular Music CD's
2. iPhone/iPod through USB Cable
3. M5's hard drive, pretty much the same quality as the USB cable
4. XM Radio & Regular AM/FM Radio
Worst 5. Bluetooth (But still sounds very good with B&O system)
Well I didn't mean to make this a long winded blog or anything. Just wanted to express my thoughts.