Google Navigation coming to the iPhone Maps.app?

Google today introduced a new (kind of amazing) Navigation app for Android 2.0.  This application is only avaialble at the moment as a beta for the Droid phone on Verizon but Google is apparently working with Apple on bringing it to the iPhone.

According to CNET it isn’t just the iPhone,

Google isn’t ruling out licensing the software to makers of portable navigation devices used in cars throughout the world, said Gundotra, vice president of engineering at Google for mobile and developers. The process involving Apple is slightly different from the usual App Store submission process, because Maps is a built-in iPhone application, he said.

One has to wonder how valuable a service like this would behave on AT&T’s network.  How will this app react to holes in service?  Will there be any caching of the map (perhaps in the initial routing phase)?