The best feature of the standard head unit is the that you can replace it with one that is much better! There is a an Ipod/Bluetooth kit available for the Blaupunkt 937 but it lasted precisely a week in my car before I demanded that the dealer replace it with something else at is was unusuable. Trust me you can walk into Halfords, hurl some fluffy dice and hit 5 better off the shelf units that the standad (including the halfords one)
As been said before, generally Alpine is considered "best" for sound quality, Sony are very competent for less money and there are tonnes of cheaper options.
The "Phone" menu is for muting the stereo if you have a 3rd party car kit installed such as Nokia or Parrot. The Parrot stuff is very good but pricey, but would allow you to keep your existing HU if you were desperate too..