I love my iPhone also. As stated above, you are confusing the old iPhone with the 3g iPhone, the 3g iPhone uses satalite GPS - not the cell towers. I have been extremely happy with my 3g and I could honestly write a 1000 reason why I love it . . but I won't go that crazy.
I will say that for caching it has been great. I recently just got into the sport and that is only because of the iPhone app ($2.99). I have never done it with out my iPhone, but I did run into a fellow cacher one day back in the woods and he had a Garmin Nuvi. I understand that he could load your way points onto it, but he still had carry around the printed out details on the cache and also had to keep refreshing his location. He was blown away at the Geocaching App. The fact that I can look at the description, recent logs, hint, and navigate using the gps cords and a gps guided compass (only lame part about it) - without even leaving the app! Then if I have the service (which in my location, is always the case) I log my find right right then and there!
Check out my screen captures
If this all impresses you, wait till you browse the 15,000 apps with an average price of said $3.13!!!
I think you need to find out what service is the good for your area. After all, no matter what the phone can do for you, it won't do squat with out service!