I listened to audiobooks from my iPod on a DNX8120 three years ago. Pretty sure it will still work.
Can you load the audiobooks onto the 9980? No.
Most of the Kenwood techs or techs at any other company for that matter, are not really techs. They're reading from a manual.
Short story, your tech is clueless. I just tried it with my iPhone 4 on my DNX9960 through Bluetooth. It works fine. Set the HU to "Bluetooth" as the source, make sure your iPhone is connected correctly, then listen away. You can pause and skip with the HU or if you have the steering wheel controls hooked up.
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