Come on in, the water's fine: http://itunes.apple.com/us/genre/ios-navigation/id6010
The ones that do use a GPS drag around a Garmin, the rest just try and work with Google maps as best they can.
A couple did switch to Android recently, but assumed it too didn't have turn-by-turn and kept muddling through with Google Maps until I showed them how to do it.
I don't know why that is exactly, but it's weird and gives me a strange impression that this is a seriously omission from the platform. This acquisition is no doubt part of a larger strategy to bring this capability (probably in a wonderfully Apple-y way) to their mobile platforms.
I agree with a previous commentator, this omission has been overblown. Yes, it will be nice when iOS comes with a turn by turn app that integrates with the whole iPhone. But if you want one now, you can buy one that works great.