Bluetooth connection says 'connecting' and hangs

I recently purchased a Toyota Prius T-Spirit 2008 from a dealer. I have been trying to connect my samsung galaxy S3 phone's bluetooth with the car's bluetooth but it is not connecting. I am following the steps from manual. Following are some of the points that I noticed.

1. My phone can see the car's bluetooth as 'hands free', when I put in the default code '1111' , it goes on pairing and say paired at the end.

2. On the car's navigation screen, it says 'connecting' and just hangs on it forever, even though phone says connected.

3. When I press cancel button on the car navigation screen, obviously I do not see the the phone connected.

4. I tried 3-4 different phones but none of them is connecting. I tried changing the default BT name and password for car bluetooth but in vain.

am I missing something?

Thanks