The iphone does indeed have a genuine GPS radio built in and Tom tom are working on turn by turn software for it. Apple engineers have said that the hardware is just as capable as a normal incar GPS guidance system.
Assisted GPS is not a bad thing, its a good thing. It doesn't mean it "needs" the assistance, it just means it has that as well.
Here is a link to Apple denying that the GPS is limited:
http://www.macrumors.com/2008/07/14/...ng-directions/
Here is a link showing the GPS radio and other componants:
http://www.intomobile.com/2008/07/14...omponents.html
