I've had both these problems... however I never thought that my case could have been causing it, which is extremely plausible.
If you hit random right when the iPod is going to change songs you will get the 'Comm. Error' 60% of the time, every time
. But really you will get the error all the time. I assume this is becasue you're asking the iPod to do two operations at the same time, which doesn't sit well with the iPod.
Press random on it during the middle of a song, that should get rid of your problem.
As for the 'Comm. Error' every 5 minutes, that happened to me after I updated to iOS 4. I dealt with it for quite some time, but then it started to get worse to the point where it would not even connect to my iPod Touch 2nd gen anymore. Now I use my girlfriend's iPod Touch 1st gen which does not support iOS 4 and I don't have the problem anymore.
Perhaps KIA has an update for the firmware/software of the iPod dock in the car, worth asking your dealer. Or even ask them to reset it, I know they can do that.