I paid around $250 total and they did it while prepping my new car 3 weeks ago. I was one of the first at the dealer to get the IPOD adapter installed.
The unit works great. Of course, you must have the BMW playlists in iTunes set up, and you can only go forward or back either through the songs or random. This is fine for me, I like random and then when I hit an album that I am in the mood for, I just unslect the random function and press the "back" key until I am at the begining of the allbum.
For me, the lack of control is worth the lack of clutter in the car. The IPOD is out of sight in the glovebox.
The sound is fine. I am an audiophile at home, but in the car, I do not care. The sound is easily better than the radio or cassette in the past. I think that most CD's sound like crap anyhow, and the MP3 format or IPOD tames the bad high frequency junk from poorly recorded songs, so all in all I am happy.
I would not pay $500 for this. Shop around. I will double check my receipt when I get home to see exactly what I paid, whether it wa $245 or $275. At the time it seemed like nothing becuase I was writing the big check for m car.