The USB drive that I used was formatted FAT32. I think the manual said only FAT32 and FAT16 would work. The manual also said that MP3's work, and also WMA files as well (there are more specifics if anyone needs them).
For FF and REW.. you just hold down the track up/down button a few seconds and it will start to FF (or REW) through the song. That was with USB audio.. I assume it would be the same for the ipod/iphone but I can't say for sure.
My phone will sync up via bluetooth for calls but I can't seem to get it to do anything else (it's an older Motorola Q).
It does take sub folders as well. It seems that the display will show the folder directly up from the actual music files. When I first had all my music on there from itunes, I was just seeming the album names (which is the folder closest to the actual MP3 files). It did not see the artist folders above that. When I put the MP3 all directly in 4 folders (music1, music2, music3, etc.) it just displayed 4 names on the screen (music1, music2, etc). It did pull the artist and song name from the MP3 tag, so that information is displayed, but the only information in the 'navigation' tree is the exact folder name which your music files are inside.
Hope that helps... let me know if I didn't describe that very well. I'm still surprised that all the full manuals are not on Nissan's website yet.
-Peter