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For what it's worth, I have been decidedly un-impressed with the accuracy of the iPhone as a "general GPS" device. It seems to be adequate for, say, "road navigation" purposes, but not for (say...) geocaching.
I TOTALLY agree on that. I geocache as well and it's really annoying (especially after paying $10 for the app) to wander around thinking you're close to the cache, only to find out you are 10 yards away (even with perfectly clear skies).