it won't sync my address book and make a loud "Beep" when it connects. I 'm thinking of going back to Motorola Razr in spite of the short battery life. Thanks in advance.

You need to get the upgrade done at the dealer
I have a v3xx and the phonebook would not download.
When i got the upgrade done it worked fine.

And do you know if the V3 needs an update as well? My wife needs a Bluetooth phone as well. Thanks.

My v3 worked fine (05A8) It's when i got the v3xx
that i needed the update. your 07 should work fine.
Did you check the settings on the phone? they are under device history/audi uhv/options