Yup, the current GPS capabilities is nice on the iPhone, but what good is it if you can't really navigate anywhere. If Apple is developing their own nav app, that would be great, if not, I hope Apple opens it up so other companies can do it (e.g. TomTom).
Part of "open is choice." I used Mapopolis on my Treo for years because their support people were so good. I changed to TomTom because I liked the interface better. I found over time that their support was not as good as Mapopolis but that their product was a little more stable. These were fairly expensive applications but they added great value to my Treo. They were not even the only choices; there were at least two more that I never looked at.
I expect that Google Maps on the iPhone 3G will take advantage of the GPS to initialize Google Directions. The iPhone will get the advantage of Google's huge database of points of interest. I have noticed that Google Maps on the current iPhone transmits some traffic information. There may even be something that approaches turn-by-turn directions, advertising supported, and otherwise free. That will be a good choice for many.
I do not want to rely on a navigation system that requires not only visibility of the satellites but also access to the Internet. Even AT&T EDGE, much less 3G, does not cover every place I may want to drive. I do not want to rely on a system for identifying my destination that requires that I use a keyboard rather than menus. Using a laptop with a mouse and a full key-board, Google is a great solution for locating destinations; it is not easy to use from an iPhone. I want other choices and I am prepared to pay for them. I want "favorites," "recent destinations," context-sensitive and location-sensitive menus. I may even want voice commands like the top-of-the-line integrated solution now have.
While some of those choices will enrich some of Apple's partners at the expense of others, all will enrich Apple. "Open" means choice. The market, not Apple, is the right mechanism to make these choices.
Palm has a history of favoring some partners, particularly carriers, over others; they are paying the price for that today as their market share shrinks from dominant to insignificant. They brag about shipping a million Centros (at a loss), while the new kid on the block sells six million and changes the technology forever.
Apple is smart, at least smarter than their competitors. They are not going to arbitrarily limit the choices of their customers to favor one or two out of hundreds of partners.
I understand the angst and the impatience. I was a Palm customer for a decade; Palm customers know angst and impatience. I think that Apple is making a Palm-like mistake by not addressing this issue up front. However, I do not think that the angst is justified; I expect to be pleased. I have waited years for Palm and then been disappointed. I can wait a few weeks or months for Apple, yet to disappoint.