I'm currently using my Palm Treo with the TomTom software and a Bluetooth GPS receiver. I have it mounted in a RAMS case which is waterproof.
I could use a Bluetooth headset, but don't.
The only problem I have with it is that in direct sunlight it's a bit hard to see, even with the brightness turned all the way up.
My wife has a Garmin Nuvi 310 which I have also considered as it's a lot brighter.
In the end my setup works and I don't have to carry a GPS, Phone & MP3 player.
A friend of mine uses a similar setup with a Nokia phone and it work good too. He's currently in Europe and plotting his way along using that setup.
If you already have a phone with a big screen, check out the TomTom site to see if supports your phone. A Bluetooth GPS is only $100 on Ebay, TomTom software $100 and maps $120. You also then have to get the mount $100 (directly from RAMS and you get local delivery!). So now you've spent $400 if you have a compatible phone.
Only you can decide if that's a good deal. If you had an iphone then all you'd need is a mount!
Options options options.....