Is it really true that the iPhone doesn't have turn-by-turn navigation?
The thing is that the built-in Maps app uses Google Maps for the maps, and the Google Maps license doesn't allow a third-party to implement voice navigation using it. 

So, Apple's Maps isn't allowed to implement voice navigation, but any other GPS software provider can offer the feature along with their own maps.

Here is a nice review of some of the GPS software available for the iPhone: http://www.macworld.com/article/156720/2011/01/gps.html

Also, that situation could change, since Apple purchased a maps company a few years ago.