Woke up this morning, picked up my phone and hit the web; all from the comfort of my own bed.
The iPhone 3G comes with GPS. I have discovered that GPS positioning is only accurate to a few metres. With in-car devices they appear more accurate because of the mapping software. This corrects the position obtained from any satalites. On the iPhone the Google maps are not able to plot and correct the position of the phone in real time.
The screenshot below shows the phone off the road when really it was inside the car travelling along.
At the moment I can only recommend that the iPhone GPS be used for approximate positioning.