PartFoundry has posted a video demonstration of a combined software/hardware GPS add-on for the iPhone that will purportedly ship in February and require the host iPhone to be jailbroken (able to receive unofficial third-party, native applications). So far, "GPS" solutions for the iPhone have been limited to unofficial applications, like Navizon, that make use of cell-tower and WiFi triangulation.
The solution consists of a hardware piece (a custom micro-controller and a standard GPS component) that plugs into the iPhone's 30-pin connector and a simple software application that presents the current physical latitude and longitude based on satellite data culled from the hardware piece. The GPS application has a "Show Map" button that will launch the iPhone's Google Maps application, displaying the current location.
Presumably, PartFoundry will expand the GPS application's functionality before the product's launch, adding live-updating location capabilities, etc. The software will be "open source/community-based."
The company claims position accuracy of 5 to 10 meters and indicates that the device will have pass-through charging via the iPhone. The GPS add-on will be priced at $90.