At last there is an untethered 3GS iphone jailbreak.
Jailbreaking your iPhone sounds illegal but it is not. There are stories about it voiding your warranty but these are probably exaggerations as well but you may have to be good at debating if something does go wrong after a jailbreak.
What a jailbreak does is remove the hobbling of the device that Apple feels is necessary to maximise their profit margin.
A jailbroken iphone will allow you to, amongst other things, load software not approved by iTunes. Some of the unauthorised software includes ways to connect to an external bluetooth gps, thus improving your location accuracy on this device.
A jailbroken phone can be reverted back to (sub)normal by resetting in iTunes if you need to send it in for a warranty repair.
Here is the link.