But it won't replace your in-car unit by itself.
But will it be good enough that I can avoid buying a Garmin? I'd love to apply the GPS "budget" to an iPhone.
To answer your question, it won't replace Garmin GPS but the tom-tom GPS app + iPhone 3GS + Tomtom kit accessory for 3GS will avoid you buying Garmin but then again you will have to pay for tomtom app + accessory kit.