Has anyone had any issues with the Kenwood USB iPod Direct, not liking the Bluetooth connection.

I'm trying to run my iPhone 3GS on a Kenwood KDC-BT8044U via the USB iPod Direct connection and it doesn't like the Bluetooth being turned on while it's playing the iPod on the iPhone, it just cuts the volume off even when there isn't a call being made or received.

Could it be down to me using the iPhone cable instead on the Kenwood iP101?