What you have to remember is the Blue&Me system is developed and produced by Windows not Apple, so connectivity is difficult and would never be marketed to work with an i-pod. Only a dealer who is not up to date would tell customers such a thing!
The adapter will work with version 5.4 and do not assume that because your car is "NEW" it will automatically have the updated version of blue&Me software installed as some cars are built up to 12 months before actually sold. As for the price, you either pay the £80, to allow your £300 phone to play music on the system, or you just don't bother and buy a £10 memory stick and leave that in your car rather than an expensive ipod..?
The bluetooth side works very well with iphone and most nokias, except n-series. Blackberry's are quite fussy with message reader and the phonebook compatibility. all you need to do is just be patient with fiat and the updates. if you have ever used a BMW or Audi system these are terrible, Blue&Me is very good!

An aux connection was not used as this system is also designed as a safety system i.e you do not have to take your hands from the steering wheel to change track. and it does not come as standard because of the reasons i stated earlier, its a WINDOWS based system.

I have just purchased a new Fiat 500 Abarth and was very excited to get the iphone adaptor to enable me to play all the songs stored on my 3G iphone.... collected new car on friday, plugged in adapter and iphone and NOTHING.... technician at Fiat dealership said he needed to reconfigure the software so back went the car today.... after much time and head scratching and a few calls to Fiat headquarters, they decided that the adapter DOES NOT WORK at all if you have the Sat Nav option installed on the Blue&Me system.
Nobody at the Fiat dealership was aware of this and I have found no info about this on the Fiat websites so I am a bit annoyed at having forked out £80 for something that is useless in my car.... had I been told in advance I would not have had the Sat Nav option, I would rather listen to my tunes.... am very annoyed so beware