Then it becomes really annoying when we're both in the car and I want to use my phone.
At the moment it autoconnects (even if you're already connected to another device), AND autoplays. Doubly annoying.
Perfect solution for the touch screen. Show a bunch of fat icons for all the found and paired devices. Usually it'll be 2-3 devices. Make it easy to tap your option as you are getting settled in the car.
1. Eliminate the screen.
2. Provide an audio port.
3. When audio comes in through the port, play it over the car speakers.
I think you are right, we should be demanding cars with zero or very little dash at all.