The low end...
There were systems announced a while ago to USE gps to enforce speed limits, and to charge road tax or insurance based on what roads you drive on...
"The antenna is inadequate in really bad weather. I drove up last Friday night and in a torrential downpour it kept losing accuracy. Several times it had me on a minor road running alongside the M40 instead of the M40 itself."
The lack of accuracy could be a problem, driving down the motorway at 70mph and your gps suddenly thinks your on a small adjacent minor road and slows you down to 30mph... I believe it might actually be illegal to drive so slowly on the motorway, because it's certainly very dangerous.
As mobile phones do more, so they will render obsolete individual devices that offered the same functionality...
Pagers
Low end cameras
PDAs
Electronic organisers / address books
And now it looks set to replace lowend GPS devices, although i imagine there will still be a smaller market for higher end ones and specialist (bike/truck) units.
What i would like to see however, is a universal phone dock standard which could be used in cars....
Consider a standard cable/cradle which combines HDMI, USB, Power, Audio in/out, Antenna... You get in the car, drop your phone into the dock...
Larger GPS/GSM antenna on the roof of the car for improved reception (esp at speed)...
Your audio routed through the cars speakers.
The in car microphone routed to your phone.
Steering column controls connected to the phone.
Phones display routed to the in-dash screen, where you can use the GPS.