Jonathan Zdziarski, the guy who discovered the possibility to blacklist applications trough Apple that was hidden somewhere in the Core Location framework, was able to kill any application that actually uses GPS.
"With a little DNS spoofing, I've managed to feed my own list into the iPhone and effectively kill any application that attempts to use the GPS, including Google Maps."
But what for? Apple should have control over its App Store, thus preventing unwanted navigation applications to be installed on the device in the first place. And for really unwanted applications on your (jailbroken) phone, it would be easy to disable the mechanism mentioned, rendering it useless. Besides, if - for whatever reason - you want to prevent people from using GPS, you would degrade or jam the signal or whatever and not prevent just iPhone users from using GPS.
So, what could that functionality of killing GPS apps be good for? The only reason I might thing of would be a scenario in that Apple releases a turn-by-turn navigation app, becomes sued and then has the opportunity to render it useless instantaneous.
But somehow, this also sounds a bit ridiculous to me.
I'd love to give more information about this mechanism. I dropped a line to Jonathan, let's just hope he'll reply soon with a bit more pieces of information ;)