The iPhone can be "paired" tot he Ford Sync system as a "Bluetooth Device." This means when you push the "Voice" icon on the steering wheel, the Sync system will prompt, "Sync, state your command." Your reply, "Bluetooth Audio." The system will repeat "Bluetooth Audio." You can push the Voice button again and say "Play," "Play All," "Shuffle," "Pause," and the system will respond. The "Seek Arrows" on the steering wheel can return you to the start of the song, or jump you forward to the next track. You will notice that the LED readout at the center of the console, or the touch-screen in the center of the console will not show the song title or artist. You can push "Media" button on the steering wheel, or push the console radio buttons and select AM, FM or Sirius, it will shift the music to another "media" but it will return to Bluetooth when selected, or by using Voice commands.
If you plug the iPhone in with a USB cable to one of the USB ports, you can then push the Voice button and say "USB." Your phone is no longer providing the Media input from Bluetooth, it's now a USB device (yes you could have Mp3 music stored on a USB jump drive as well). After you push the Voice button and say USB, the system will provide respond, "The system has detected a USB device." Now, wait a minute or two, then push the voice button and say "USB." The system will respond "USB, state your command." Say, "Play." It should start playing your music, but this time you may notice the LED display or the touch screen (when showing the entertainment screen) will show the artist name and song title. After the system "indexes" the music on your phone or USB device, then you can push the voice button and say "Play Artist The Beatles" or "Play Song Let It Be." Please note some content may be copyright protected and therefore cannot be played on the Sync System. Apple has got some licensing info encoded on some of the songs (this means that the song may be able to be played on a specific computer or device). Most store bought CDs can be "recorded" on iTunes and stored on a phone or a USB drive and can be played back. The USB function, along with the cord input or USB input, allows the searchability and voice commands. It must have more "bandwidth" that allows for that compared to streaming Bluetooth.
Also, when you push the steering wheel Voice button and say "Bluetooth Audio" you can then go to your iPhone and start your Pandora (or other streaming music App) and it will start playing through the vehicle sound system.