The new iPhone 3G S features a built-in compass, and GPS manufacturers are working on downloadable navigation apps. [Photo courtesy of Apple]

After the unveiling of the new iPhone 3G S, the biggest buzz from yesterday’s Apple Worldwide Developers Conference was arguably the announcement of turn-by-turn navigation for iPhones, starting with an application from GPS manufacturer Tom Tom.

The announcements promise to significantly improve the limited navigation capabilities of iPhones, under their current operating system, which will be upgraded to the new iPhone 3.0 on June 17.

Our colleagues in the Cars department have done a bit more digging into the Tom Tom announcement, set for release date later this summer; the price is as yet undisclosed. According to a rep, the maps and software will resemble the brand’s standalone GPS units. Intended for use in the car, the app will give turn-by-turn directions to destinations and will be able to create routes to addresses in the phone’s address book.

The company says it will also offer a car kit with “secure docking, enhanced GPS performance, clear voice instructions and hands-free calling, while charging your iPhone at the same time.”

But other GPS manufacturers may soon jump onto the GPS platform offered by iPhone 3.0, say our Cars colleagues. Next up, they say, may be Navigon, which announced its departure from selling GPS units in North America while leaving open the possibility of offering their own GPS applications for smart phones.

Will iPhone apps mark the beginning of the end for standalone GPS units? Maybe. While there’s a welcome convergence to using a smart phone as your GPS device, there are also some downsides. iPhones, including the upcoming 3G S, have 3.5-inch screens—which our Cars colleagues say are fine, though larger screens allow more information to be displayed. And family members can share a GPS-enabled iPhone less easily than they can a GPS unit, since the iPhone is also, well, someone’s phone. Finally, it’s unclear what iPhone GPS apps might cost; they could be very pricey.

What do you think? Would you consider using your smart phone as your GPS unit?