iPhone's Google Maps application does pseudo-GPS by approximating your location using information from cell towers and Wi-Fi networks (via a partnership with Skyhook Wireless) but it's far from precise.
I have a Garmin nuvi GPS receiver in my car that I love and have come to rely on. It has a top-notch interface and it's a single-purpose, no compromises device. Every phone, PDA, watch/GPS hybrid that I've tried just doesn't measure up. I really don't need GPS technology in my iPhone, especially if it: a) adds heft, b) adds size, c) decreases battery life and/or d) increases costs.
JG Mason gives four reasons why he thinks that iPhone GPS is coming, but if there's a monthly charge for the service, count me out. Garmin doesn't charge me a monthly fee, I already paid for those government satellites in my taxes.
There's no questions that a true phone/GPS hybrid is feasible, Garmin's announcement of nuvifone on 31 January is evidence that a market exists. I think that there are better areas for Apple to focus their R&D resources on.
What about you?