Hello, and Welcome
Some answers from my point of view:
1. Generally, '05 is considered a better year than '04, although there are a good number of folks on here with '04s that are quite solid. On an '04, its considered that a VIN number with the last 6 digits higher than 045000 (later '04) are better than the early '04s
2. '05 saw a change-over from the CD-based Nav system to the DVD-based Nav, although there is no known of cut-off date where DVD replaced CD. Also, I believe OnStar was removed, but I think OnStar no longer functions, as it was the analog cellular version.
3. With air, some people have had compressors rebuild under a TSB (tech service bulletin), and I recall a few having controllers replaced. Other than those, I don't think there have been any major issues with air. Honestly, I'd buy it in a heartbeat if I found one with it, as it helps off-road, has a smoother ride (from my limited experience), and helps when towing as it keeps the Touareg on an even keel.
4. See #2, above. I don't have Nav, but most (if not all) of the Nav-equipped Touaregs have a 6-disc CD Changer in the trunk. I'm pretty sure you can listen to the radio or a CD from the changer while the Nav is navigating. Also, a DVD-Nav, when upgraded to firmware version 47 or newer in an '05, can play audio CDs in the head unit, but obviously not while navigating, as the DVD needs to be in for that.
5. There is a user on here named Spockcat. In his signature he has a link to info on ways to add Bluetooth, iPod and many other features to your Touareg.
6. For '04 and '05, there were a number of "update" campaigns that addressed many of the issues the Touaregs were having, and generally brought their software to a similar level as an '06. It's best to check with the service department at a dealer to make sure all the campaigns were completed. It's not a bad idea to get their service records checked for any other anomalies as well, like spending 20+ days in the shop or something else outlandish like that.
7. The seats do fold completely flat, however the seat bottoms fold forward against the front seatbacks, then the seatbacks fold down to the floor. This does shorten the cargo area a bit. The headrests need removed to fold the seats, which we've had two different discussions on in the last week.
8. I believe VW CPO is two years, 24,000 miles n top of the original 4yr/50k, for a total of 6 years/74,000 miles. I believe you can purchase a VW RealDriver warranty in addition to this, although I don't know how it works on a CPO versus the 4/50 warranty.
9. Many of the chassis components are common, or very similar. Some parts, like the suspension swaybars, are interchangeable. The interior has similar layouts for everything, but the components are styled differently. Same with the exterior, where the styling is the biggest difference. The V6 engines are essentially the same from what I understand, while all other engines are different.
Reliability-wise, mine's been very good. Generally, as the years have gone by, the problems seem to be less and less (ie '05 was better than '04, '06 better than '05, etc).
Hope this helps you with your decision.
Matt
Considering Touareg (Long Post)- Newbie Questions ? 
Does the CPO cover the year for two additional years and is there an option to buy an extended VW warranty?
Linear Mode
