yes, you will need to keep the headunit to keep the radio functionality. Moreover, you'll probably need it for the OBC functions too!
I'm not sure how it is with the MKII nav and DSP (I'm assuming you're selling those on ebay or something, if you're not, then you should!), I have the Radio and MID. You could get the MID and Radio/cassete player (fairly cheap from ebay) and hide those. That way, you'll get the top quality radio that you can still control via the ibus.
what are you using to fire off the ibus commands?