I've tried just about everything. I'm currently on the new iOS 5.0.1 and I still have the issue. Changing the volume on the phone doesn't do anything unless its all the way down. Even so, I have to turn up the volume on the headunit ALL the way up to 40 just to hear the music at a "normal" level. When I do that the audio quality is crap, it sounds like the old FM audio streamer.
It seems like this problem happens after I use the bluetooth streaming and then turn off my car for a while. Once I come back and try to resume play the problem happens. Its really annoying because it works so well