There are a lot of good GPS applications available for the iPhone, both free and paid, but apparently people don’t pay that much attention to the new magnetometer feature, which is basically an integrated compass.
While the GPS is definitely better than a compass for finding one’s location (in fact, it was created to replace the thousands of years old device), having a compass can also come in handy when you’re in a valley, in the woods or any other location where the GPS signal is too weak or there are no maps available.
So, here are some of the best available compass apps for the iPhone. Yes, there are more available, free and commercial, but these are the most popular among users, and therefore, the best.
Planets. This is probably the best iPhone compass application that can be used for real navigation. The reason why is that it’s not just a compass, but it also shows you the positions of stars, whether its day or night, so all you need to do is learn the old technique of navigating by stars and you’re good to go anywhere, especially on a sailboat 
. It also has 3D representations of Earth and other planets, which are interesting to see and use.
Digital Compass Free. This is both a digital compass and a GPS application, so you can have a 2-in-1 app if you like saving space and time. It has an interesting digital display instead of the usual arrow, and is one of the more precise compass apps available.
CompassApp. This is a pretty standard compass app for the iPhone. There are 2 things that go for it though: the first is the ability to use any background for your compass (a picture, a photo you just took, etc.) and the second is the fact that it displays your current latitude and longitude, so you can use it with a real map if you don’t have a GPS navigator application installed.
City Compass. Another standard compass application, which has one unique and pretty interesting feature: it shows you which cities are located in various directions (North, West, East and South) and how many miles are until you reach them. Pretty entertaining!
Now you have a way of replacing your old compass (though I wouldn’t do that if you use it seriously, mainly because it doesn’t run out of batteries like the iPhone) and finding your way and location even without the assistance of a GPS application.