Just to share my encounter on the "Bluetooth connection failed" problem. My radio stop connecting to my phone (iPhone 5S iOS 7.1.2) just this morning. It will show 25% - 50% - 75% then failed. Numerous reset and clear Bluetooth Memory yield no result. Also tried "forget device" on iPhone and re-pair the radio, same. Without the bluetooth connection all I get is mirror display, no touch function.

 

Lastly, I tried "Reset Network Settings" on iPhone and redo the radio setup again, and viola, it connected and everything works as usual. Those have similar problem do give it a try.