If it's anything like the NAV system in the Vogue you can get an "Intravee" module to replace the CD changer with an iPod connection instead. Not sure what the display is like on the base stereo though for how album/track navigation etc is done but the Intravee site has a load of examples of their module working on BMWs with the basic stereo systems so don't see it being much different.
If it's a post 06 model that doesn't use the BMW audio gear i think you can add an aux-in pretty easily by buying a cable kit and leave the cd changer in place.
When i added the Intravee on ours it was all done in the glovebox replacing the CD changer, i didn't take the dash top off. There isn't anything really in the way of connectivity at the headunit itself, the radio module etc is all tucked away in the side of the boot so must connections need to be made there and run back through the car unless you hook in where the cd changer was.



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