Quick Fix
I have this same problem with my '05 A6. A quick fix is to raise the temperature knob to "HI" for max heat for few seconds then lower it again to your desired temperature. You will get cool AC air coming out of your side vents again.
When I took it in for service, they said a "valve was sticking."
Replaced R&I Pump and Valve unit
Part #: 4F1-959-617-A Valve
Seems to be working fine now.
Your warranty should cover it.
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