What car have you got and does it have an Athermic windscreen? - The iPhone is far from average when it comes to GPS performance from the built in receiver (its pathetic TBH) but even so it should work, even if its not as good as what you are used to from other hardware.
To be honest I don't rely on the iPhone for GPS derived speed as its too far out to rely upon, the navigation applications are like toys in comparison to what the real kit has to offer - So far only Sygic has got my interest and turns in a solid performance dispite the poor quality hardware its expected to perform on.
If it were possible to couple a Bluetooth SiRF-II or SiRF-III / MTK receiver to the iPhone then the device would perform correctly, this will be down to Apple though, SPP support will be needed and probably an update to most of the GPS based applications but at the end of the day Apple have supplied a pathetic GPS receiver in the iPhone - Mike