There have been phones with built in GPS for years now. The iPhone 2 isn't going to make TomTom/Garmin/Navman/whoever start worrying anytime soon. They don't cater for the geek with the GPS smartphone.
Umm, other "phones" don't matter. They weren't the iPhone. Like it or not, it's made a huge impact on the industry with a small roll-out over the past year.
The price has just been dropped to $199 for 8GB and $299 for 16GB. This thing is going to make an Earth-killing crater-sized impact.
Mom, dad and the grandparents are going to be using the iPhone. They're not going to be picking up a $400 Nuvi anymore.