When you put a USB memory stick in the usb hole the function on the diplay allows you to choose this source. However, if you turn the car off and then back on again the source for this input is shadowed, unless one takes out the memory USB stick and puts it back in.
Interesting, as mine behaves differently. I have my USB stick permanently plugged in, and every time I start the car, it continues playing USB tracks from where it finished last time.
We have the JBL sound system in ours and the auto-play feature works fine. I have several hundred songs on my phone and it starts playing almost as soon as the car is started. We're currently driving an Auris Hybrid because our Prius is being repaired, and this has a JBL system too, but for some reason takes an absolute age to load the playlist from my phone. This suggests to me that there might be a software issue, with our Prius having a later version installed. Perhaps. Maybe worth checking if you have the latest software.