I have the same exact car and looking to upgrade the stereo as well as all speakers in the near future. The only reference I have found is
http://www.bimmerboard.com/forums/posts/17939 which upgrades from the stock tape/radio player to BMW cd player, but don't know if it works on our model (although some one did get it to work on an E32 '88 model). Do you have the stock player? or an after market piece. I would be interested in what you have done since I desperately need advice and help
Shawn