2009 Toyota iPod interface problems

I have a 2009 Prius with the official Toyota iPod interface installed. While this has generally worked (although the implementation is pretty lame), lately when I turn the car on with the ipod plugged in, the interface does not appear. Normally without an iPod plugged in, you can use the AM/Sat button to switch between AM and the Sat interface (where the iPod interface is installed). However, when I start the car with the iPod connected, the AM/Sat button will not switch to "Sat". If I turn the car off and back on, the interface will appear. This happens with both an old Nano and a newer Touch iPods. I tried re-formatting the Nano but it didn't make any difference. My local dealer has not been helpful other than to suggest replacing the interface or the radio (or both). Seems like there should be a better solution.