There is a big difference between Google Maps simply constantly showing where you are, and Navigation applications showing you what to do next.
Navigation apps give turn by turn instructions, often with voice.
But most importantly, navigation apps know when you've gone off course, and automatically recalulate your route.
(I suppose Google could add such a feature, or a third party could notice the off course and ask Google for new routing.)
It's also worth noting again that the iPhone doesn't allow multitasking for most apps, and wants them to exit during calls. (Which is especially dumb for a 3G phone that should be able to do both.) Imagine if you were coming up to an intersection and the phone rang with an important call.
Contrast that to say, TomTom on a Windows Mobile phone, which continues to show directions on the screen even while you take/make calls or texts.