You have to use USB. My problem is navigating through the myriad of albums, artists and genres that I have on my 64 GB iPod touch. I have setup a few playlists, but when I want to listen to an album or artist in the middle of the alphabet, I have to scroll for what appears to be forever to get to it. Oh well, I guess that's the price you pay for having a diverse taste in music.
I gave up on this and just use RANDOM function. Well, just be glad that you can scroll in either direction with our Prius system...my wife's Acura TSX system only allows you to scroll in ONE direction (forward)...so, if you want to listen to a song near the end of the alphabet, then you need to scroll thru A, B, C, D, etc.... With our system, you can scroll backwards to get to the song quickly.