...warranty indicating they guarantee it works with all phones, then you have a leg to stand on. BBB if CA can walk you through your legal particulars as a consumer. My guess though is, they cover they posterior region by the fine print if you look carefully. Sorry to hear you are having to deal with this- it's a pain to say the least.
There's a whole plethora of complaints about certain handsets not pairing up with specific automobile mfctrs factory equipment, spare all the third party stuff like Kenwood.
A couple of places come to mind where you could check to see if anyone else has a workaround for your system. Edmunds.com and AVSforum.com. Edmunds is probably the premier centralized discussion forum for automobiles/equipment/etc. Howardforums.com sometimes has threads on pairing mobile devices which can come in handy. I didn't see your Kenwood listed, but other folks have had questions regarding the 4S with other stereos, etc.
The closest I have come to anything posted online which deals with your handset/Kenwood in the following from the apple forum. Understand, with each iOS update, quite often features break on external devices.
Wife purchased iPhone4S in Dec. 2011 for me. Previously I had iPhone 3 and VoiceCom 1000 car component for hands free operation while driving. I had no complaints. Worked flawless. Discovered iPhone4s was incompatible with VoiceCom1000. I was directed to AutoHaus in Haywardwhich does factory authorizations. I purchased Kenwood DDX418 car stereo at the salesman recommendation. It was guaranteed to provide the hands free operation that I needed. As it turned out it has never worked. I can't return the stereo. What can I do or purchase to make hands free voice recognition to work. My last option is to throw out the DDX418 and statt over.