OK, I am stunned here.
As another poster has already said, in the UK at least, I have a TomTom GO 510. I paid a one off fee, get step by step navigation, and free map updates every few months. How come you get charged for doing exactly the same thing on a phone, that you can do for free, and on a bigger screen, with a stand alone TomTom unit? Anyone would be crazy to pay a monthly fee for something you can get for free!!!
Please explain, I am totally lost!!!
Because it's a cellphone. The service providers consider it an add on service and an excellent way for them to increase revenue (for Apple as well). It's likely that the GPS software will be on the phone, but to activate it, will take adding it on through AT&T similar to the way SMS are bought.
I too have a Garmin GPS, in fact I have two Garmin Nuvi 680s so I have no use for a GPS on my iPhone, especially one where it will likely be fee based.