"Normal" GPS devices usually feature either antennas that look like ceramic squares or like a helix. Square antennas are intended for horizontal reception while helix types respectively work in an upright position. Have a look at the pictures and you will figure out.
Those antennas are well for use in navigation only devices like those manufactured by Garmin or TomTom where space is not a so big matter, but obviously they're too big to fit inside a small device like a PDA or cell phone.
I had a look at some mobile devices like PDAs and mobiles in order to figure out how a GPS antenna might look like. I searched a bit and found out that the GPS antenna might look like this. Or like this. Or even like that. To make it short: it could look like anything.
So what now. Having a look into my brand new iPhone? Fortunately, those brave guys from ifixit and rapid repair already dismantled an iPhone 3G, so I didn't have to destroy mine ;-)
Have a look at the PCB layout and how the ICs are positioned on it. You will find an explanation in techonlines "under the hood"-article. As you can see, the GPS chip from Infineon is situated in the vincinity of the SIM slot, just left of it. So, if you hold the phone in the normal upright position, the chip is almost where the upper left corner of your screen is.
So, it seems obvious that it would be a good idea to have the antenna placed right next to it instead of routing the GPS signal across the whole PCB. And there it is!
Have a look at the rapid repair site. As the screws are at the bottom of the iPhone, it is opened from bottom to top. At the top left of the iPhone (after lifting the top cover and the display, look at the picture of step 5), a sticker with a 6 printed on it ca be seen.
According to David Carey from Portelligent, this is the GPS antenna! It can be seen well in rapid repairs step 14 picture.
Given the fact that this is the GPS antenna, reception quality is fairly ok in my opinion. Be the GPS chipset as good as it may, with that funny piece (sorry) of antenna, no better reception quality can be expected.
Which leads to another issue. Given the fact that the antenna is situated in the upper left corner of the housing, (car) navigation apps that use landscape mode should have the iPhone rotated so that the home button is on the left, not on the right!
So, like this would be okay, like that not. In reality, that doesn't have to make a difference, but I think one shouldn't take chances. In the end, best thing would be to have the choice by rotating the device 180 degrees. If this wasn't for GPS reception, at least you can improve cable handling ;)