can i change the factory "S" radio to a premium touchscreen?

Yes you can I have done it. You can plug your fm/am antenna into the left white FAKRA connector and then get one of these and plug it into the green FAKRA connector.
http://www.tss-radio.com/products/dot-micro-antenna-with-fakra-adapter.
I already had a sirius antenna so I just got the adapter. I placed the sirius antenna under the dash the same place as shown by the red circle in the 7th pic on this link.
http://forums.tdiclub.com/showthread.php?t=258543
The bluetooth still works how ever the iPod interface is not working. I'm going to looking the coding this weekend to see if I can get it working.

thanks matt for the info!
I hope, I could get a hold of an RCD-510 so I could get started already. How much did the radio change cost you in total?

Keep me updated on the iPod interface! thanks matt i really appreciated

I got the radio for $500 of eBay and the FAKRA adaptor was $15 with shipping. Be sure the radio is a 2010 Ive heard the older radios don't have the Sirius tuner built into them.
There are some goods videos on YouTube on how to take the dash apart. I used one of those customer reward cards you get at CVS or a grocery store, there stiffer than a business card and little more flexible than a credit card. I ran it along the edge of the dashboard to pop the trim out. Don't use screwdrivers.

Yeah I'm betting in eBay for the Radio already I hope, I get it.

ohh alright thanks for the advice matt, appreciated it!

My friend works at a audi dealer so I went over there on saturday. He hooked up his computer but we still couldn't get the Ipod interface working.
Once connected his choice's were very limited because his computer wouldn't recognize the VIN number. He thinks its because technically his computer only supports audi cars.
Either way we still could see that I had a antenna error probably due to the fact that the jetta LE doesn't have the diversity antenna.
Honestly with 6 discs,sirius and a SD card I don't know how much effort I'm going to put into getting this working as I didn't really care if the car had Ipod hook up when I bought it.

hey matt.
well i was wondering if the antenna can be replaced to the diversity one?