Bluetooth Audio Problem

Just got my III w/ nav (sunroof). I configured my iPhone 3G (3.0) to do both Bluetooth phone and audio streaming. I noticed a weird sound while playing music via bluetooth. It sounded like the speakers were slightly blown. I immediately check FM and Sat to see how they sounded and they sound fine. I then reset my iPhone and it sounded fine for a few minutes after that the bad sound came back. It seems to come back quicker if I mess around with the Nav unit. I also tried using the AUX jack and that sounded great all the time. Is anyone else hearing this with bluetooth streaming? What troubleshooting steps should i take?
Thanks.

 

Finally someone to confirm this. All my mp3's are 192kps or above so it's not a quality issue. Now to try and figure out if it's a Toyota or an Apple problem. My hunch is it's an Apple problem.

Does it sound good for some time after you do a hard reset (not on then off)?

 

I FIGURED OUT MY BT AUDIO QUALITY. Thanks to someone that posted about the WiFi being on the same frequency as Bluetooth in the Apple forums. I usually have BT turned on always to use it at home. I tried turning it off and I could not duplicate my problem. I turned it on and instantly the sound quality diminished. On a side note, I had a few friends complain about the sound quality of my calls to them using the in-car BT. Once I turned off WiFi all calls are crystal clear. So hopefully Apple will fix this in an upcoming update. I will be opening up a case with them now that I can repeat the problem.