What the iPhone 3G has is A-GPS (Assisted GPS): normal satellite-based GPS is augmented by cellular carrier transmitter tower triangulation (or even WiFi hotspots) for greater accuracy, particularly useful when satellite-based signals are interrupted (for example, multipath situations involving tall buildings).
Standalone GPS receivers (Garmins, etc.) historically only used satellite signals and did not connect with cellular carriers.
GPS hardware could easily be built into an iPod touch. The biggest issue is even if the device knows its coordinates, how does it display those on a map? WiFi availability is key for realtime map updating, but conceivably a larger map could be locally cached for use when the WiFi signal is unavailable. There are already standalone maps available for major metropolitan areas for the iPod touch at reasonable prices (99 cents for the SF Bay Area or L.A.). Locally cached map data could be an App Store purchase for iPod touch users.



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