The drawbacks outweigh the benefits.
a) The location tech in the current iPhone is much quicker. No matter what chip, even SiRFstar chips in full blooded GPSes take awhile to lock on. When using the very capable N95, I'd often drive across town or walk half way to my destination before I'd get signal lock.
b) I'd never use an iPhone as a car GPS. Not even with updated software. The amount of work and expertise that goes into a high end, 5+ generation Garmin is some serious stuff. The logic is all proprietary. It's not easy to do. And GPS antennas need to be somewhat pointed. If it's on your dash, it needs to be on the back. If it's for walking, it needs to be on the front. Which is it?
c) Battery life gets screwed when you keep the GPS on with constant updates.
d) These chips aren't exactly small, although they have been known to fit in things like Suunto watches. That going to make this thing thicker?
No thanks. Don't need it. I'm fine with the current location technology. It works for walking and that's all I need it for.