The phone book would transfer, and you could select a number to call, but it would not make the call, nor receive them.
So I tried deleting all the previous parings and re-pairing, removing the BT module and reconnecting it, and even taking the battery out for 20 mins - none of these made any difference to the issue.
So I moved my attention back to the phone.... from the BT control panel on the phone, toggling "phone favourites" and "phone recents" off, cured my issue. I assume these options must of come in with iOS4.
These are the options;

Now I have functioning BT again, and I hope this may be of some help