Whenever friends or family ask me to recommend a good smartphone w/ GPS for navigation, my general response has been "don't use your smartphone as a full-on GPS". I know this sounds a bit against the usual mantra of "smartphones are meant to do everything" but there is just no way a smartphone can replace dedicated full time devices (ie. GPS, Computer, Camera, etc...). Please don't get me wrong, I am definitely for using my smartphone for everything possible, for the most part, as fillers. On serious tasks, I still pull out the dedicated devices.
When it comes to driving, I prefer to have a dedicated GPS unit. Considering what iPhone's App store charges for voice guided navigation (usually $10/mo or $100 for lifetime), you can afford to buy a dedicated GPS unit for your automobile. Of course one could argue that a low end GPS w/o subscription doesn't offer real time traffic, but I'll take the better GPS experience from dedicated unit anyday and can still answer calls and look up traffic info from my smartphone. You'll find this USA Today review helpful in explaining why I would pass on using my iPhone as a GPS navigation solution. Another good reference is from Autoblog on why iPhone 3G GPS navigation is inadquate.
So what is GPS good for on a smartphone you ask? Well, for one, it is great to have it to know exactly where you are on foot and/or provide basic driving instructions in the event if you do not have a GPS unit. GPS combined with internet/search function makes it easy to look up for a store or restaurant nearby. There is also the Geo-tagging function with GPS when used with your smartphone camera. My argument is simple, you probably won't take your smartphone as a dedicated camera at a wedding or ceremony (thats what your dedicated point-n-shoot or DSLR is for) so why would you think you can get by with your GPS navigation with only a smartphone?