James asks the same questions that confused me when I started my research. Does the iPhone4 really have a GPS chip. The answer is YES.
In Turkey, we used the SIM PIN feature to lock the SIM, so even if there had been cell coverage, we did not receive it. Others have just removed the SIM card to get the same result (the goal being to prevent the phone from draining the battery searching for a signal). We were far from any WIFI. We absolutely had our location showing on our maps, and we could use it to relocate a lost path when we were just 5 or 10 meters from it in dense brush, or to find hidden buildings when we were in white-out fog conditions.
Part of the confusion may be that the iTouch does NOT have a GPS chip.
The WIFI-only-iPad does NOT have a GPS chip.
The iPhone and the WIFI+3G-iPad DO have GPS chips.
If you're not careful when you talk about iThingies, it is easy to get mixed up about what does what.
As I understand it (hopefully Bob Gross, the BPL GPS expert) will chime in here), the iPhone uses WIFI to accelerate the first location fix. Without a WIFI signal, it takes the iPhone roughly five minutes to establish the first location fix after a full power cycle. However, once our iPhone was powered on, we never turned it off, we just put it to sleep. When awakened from sleep, it takes perhaps 10 seconds to get a new location fix (I haven't timed either one, I'm just giving you my impression).
When I went to the Apple store to buy my iPhone, I told the sales agent that I didn't actually care about the phone, I was just buying it as a GPS device, and the agent assured me that it would not work. Totally confused, as I had read many forum posts about it already, I bought it with the 30-day-return assurance. The first thing I did was remove the SIM card, turn off WIFI, and head out to the baylands where there is no WIFI anyway. It worked just fine. I returned to the Apple Store to tell the Sales Rep about it, and the other reps concurred that the GPS chip works just fine without WIFI or cell, and the one rep was misinformed. I tell this story to illustrate how hard it can be to sort this stuff out.
James, you said " I tried to get a fix on the Washington coast using the standard maps program and got nothing" -- I wonder if you were getting a GPS fix just fine, but could not see it because the standard maps program does not store maps for offline use. This is the essence of Ken's article -- you need an app that allows you to pre-download the maps for offline use. If you have an iPhone and you're in the US, then invest 8 bucks to buy Topo Maps. If you think it was a waste of $8 send me a PM and I'll buy you a drink! (this offer applies only to James, not to everybody!)
Keep asking questions and I'll do my best help out. AmyL
PS, my understanding is that iPhone3 has a GPS chip but it is not as powerful as iPhone4's GPS chip, but that is rumor I can't substantiate.