There are other navigation apps that do store offline maps; the reason they're not popular outside of outdoor enthusiasts is that they take up a huge amount of space. It seems like a reasonable trade-off to me.
Cell phones could easily provide navigation capabilities for at least the country of origin of the buyer and several around it if the creators decided this was a desirable thing.
All of the US is 1GB. See here: (dutch):
http://www.laptopshop.nl/vragen/29528/115735/tomtom-navigato...
Flash runs a few $ / G. Of course your phone manufacturer will screw you completely on the memory when you buy it (the price difference between a 16G and a 32G phone is ridiculous, but I guess I can't fault them as long as people fall for tricks like that).
Yeah but it won't also have several GB of games, audio, apps and photos on it as well. People would cry bloody murder if they found out google was using 7 GB of space to cache the world map by default.
If you are a person who needs a world map at their fingertips there are apps for that but the average person just needs google maps to figure out what turn the should take occasionally.