Aloha DaPhatty,
I've noticed the same thing myself. I have used the GPS in an attempt to verify the "jumping" complaint I've seen here. Even on EDGE, the dot doesn't "jump" around on the map, unless I'm zoomed way in. With 3G, it never "jumps" around.
That being said, every time I've used GPS my iPhone has gotten pretty hot. I'm only talking an hour each way to and from work, on average, but I think it really shouldn't get that hot. Like you, I've tried this with my case (Incase) on and off, but with the same result - excessive heat. Of course, I also use a Belkin car kit (the one with Clear Scan) to both play my iPhone's audio through my vehicle's sound system as well as charge my iPhone. I've also received the same results while not on a charger, both in, and out of, the case. I also noticed that the battery was drained much more rapidly when the GPS was active than otherwise.
HawaiiMacAddict