I have found this opens source sat-nav project at http://www.navit-project.org/ . it has been successfully compiled for various arm processors (v4 and 5), and also wince, and linux, so we know it should be able to run on the raspi.
I have no knowledge on compiling etc, so could someone please give it a go ????
This would be a brilliant addition to the raspi !!!!
I would be prepared to buy a gps dongle and test (even though you can simulate a route within the software !!!)