I used the iPhone for a navigation device for a couple of years. I used the Navigon app. It's doable, but I don't recommend it for a few reasons.
First, the Navigon app left a lot to be desired in the navigation department. It would give me some truly bizarre routes on a very regular basis. It would almost always get me to the destination (though it led me down dead-end roads several times), but it rarely gave me the fastest route (when on that setting). Often I would take a route that I would know was quicker, and once I turned off the recommended route, it would recalculate. The route I would take would then show up both shorter in distance and in time... So it leaves me wondering how it goes about choosing its routes. I've used several stand-alone GPS units, and each one was far and away better in nearly every aspect than the Navigon app. I truly expected a lot more from it.
The iphone itself was problematic. It would lose GPS signal and require a reboot to get it going. This wasn't a constant issue, but it happened a bit too frequently for my liking. In hot temperatures it would overheat and quit charging, or the charging would continue, but it couldn't keep up with power consumption. This would result in me having to turn off the navigation to conserve battery. My iPhone ate vehicle charges. If I was going on a trip longer than a day, I'd always bring along a spare charger, because I just simply couldn't trust the charger to last. To be fair, these issues were all with 3G and 3GS phones. Both phones had the exact same issues though. Maybe some of the problems have been fixed with later generations.
I got sick of Apple (mainly being forced to use iTunes) and bought a Samsung Galaxy S3. I am now using this for navigation on the bike and am using the Sygic app. So far, I'm not running into the lost GPS signals or eating chargers. However, it did stop charging when I was out in single digit (F) temps. However, I'm rarely riding in those temps, and when I do, it's relatively short distances, so that's a bit of a non-issue. I haven't tested it in hot weather yet either. The Sygic app is fantastic. The routing is much better, it's quicker to respond and 'think,' the layout and graphics are (subjectively) much nicer, and it's just all-around a nicer package. However, I haven't tested the GS3/Sygic nearly as extensively as the iPhone/Navigon. However, right off the bat, it seems much better.
In reality, I know I'd be much happier keeping the cell phone as a backup navigation device and getting a good waterproof GPS for my primary device. However, the good waterproof units are expensive!
I use Ultimate Addons cases for both the iPhone and GS3 and have been extremely satisfied with them. They're fully waterproof, the screen is completely usable inside the case, they're very compact, and the prices are very reasonable.