Webradio will work if you set up your main phone as a hotspot and connect to it with your iPhone 4.
You don't really choose which one to use - the iPhone 4 connected via USB will work as basically a media server, but your iPhone 5 connected via bluetooth means that your iPhone 5 will be used automatically for phonecalls, etc. Text messages on your iPhone 5 will also be automatically read via Bluetooth MAP (if Apple supports this, which I believe they do).
I use an android device as my main phone, but otherwise the same sort of setup.
You only need to launch the BMW App on your iPhone 4 for this to work. The only time you'd need the BMW App on your iPhone 5 is if you're away from the vehicle.
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