It is possible to hack another person's phone via Bluetooth and use it to make phone calls, send text messages etc. This is called Bluebugging.
On older phones it's also possible to hack and browse the files, edit the contacts etc via a similar form of hacking called Bluesnarfing, but this is less common then Bluebugging.
A very skilled hacker can also decode your Bluetooth access code when you’re pairing a device as well as access your phone outside of the standard 10m Bluetooth range but they'd need specialist equipment in order to do this.
These security problems usually only exist in older phones, bigger companies such as Nokia and Sony-Ericsson have pretty much resolved these security problems on their newer phones, you only need to worry if you have an older phone or possibly one from another manufacturer.
As a general rule to increase security just make sure your phone only has Bluetooth switched on when you’re actually using it and set your phone to invisible.
More information on Bluebugging, Bluesnarfing and other Bluetooth security issues can be found on the official Bluetooth website:
http://www.bluetooth.com/Bluetooth/Learn/Security