We began caching with our Motorola i530. We found our first seven caches (including a FTF) with our cell phone. It was difficult, but not impossible. The readings were not very accurate, and it took at least an hour each time. There was no map, no compass, no go to, just the coords of where we were standing... it was a lot of work, but caching is always worth it.
We were so excited the first time we went out, and we didn't really believe that anything was out there, so when we actually found the cache we were hooked for life. We realized after that first day of caching that we would need a gps, so we researched and finally bought a Magellan. However, we couldn't not go caching while gathering info and waiting on the post office, so we continued to go out with the phone.
After having Magellan for a few months it is easy to see why people don't use their phones for this sport, but hey, when there's a cache at stake, you've gotta do what you've gotta do.