Remember when personal-navigation devices just told you where to turn? Nowadays most come packed with all sorts of extra features like MP3 players, digital cameras and games. But as I found out on a recent field test of some of the latest devices, the only bells and whistles that really matter are the ones that make it easier to get from point A to point B.

Case in point: While testing one of Garmin’s (GRMN) newest devices, the nuvi 880, I couldn’t find much use for the built-in music player (isn’t that what my iPod is for?), picture viewer (I can see photos just fine on my cameraphone, where they already live) or alarm clock (I don’t do much napping in my car). But the one bonus feature that I did find valuable was the 880’s advanced speech-recognition system, which lets users look up addresses or “points of interest” like restaurants and malls using their voice.

The setup took a little bit of time – in order to use the speech-recognition system I first had to attach a remote control to my steering wheel. Then, when I needed to ask for directions to a location, I had to press the button on the remote before speaking to the device. This took some getting used to, but once I got going it was fairly straightforward and made entering addresses both easier and safer while driving, since I didn’t have to reach over to fiddle with the device.

Of course, like many voice-recognition systems today, the nuvi 880 technology didn’t always hear me right. At first, when I asked for the city of “Palo Alto” the device asked if I had said “Rialto,” and when I requested directions to “Stanford Shopping Center” it thought I had said “standard parking.” But after I started speaking more loudly and clearly into the device, the accuracy soon improved.

As nice as the nuvi 880’s voice-recognition service was, would I pay a whopping $1,000 for the 6.2-ounce gadget? Probably not – not with gas prices hitting $4.60 a gallon in my California neighborhood.

But there’s a reason Garmin, one of the largest makers of GPS devices, and its competitors are piling on the features. Demand for GPS devices is slowing, and margins on the once highly-profitable gadgets are also slipping. Meanwhile, competition from cell phones is heating up, as phones like Research in Motion’s (RIMM) BlackBerry and Apple’s (AAPL) third-generation iPhone increasingly include navigation features.

“End demand [for standard GPS devices] itself is sluggish,” Tayyib Shah, an analyst with Longbow Research said in a recent report. “Although U.S. and European demand has picked up quarter over quarter, it is showing signs of strain due to weakening consumer spending.” Research firm iSuppli expects 41 million personal navigation devices to be sold this year, or TK% more than last year. Still, that’s below the torrid 300% growth rates seen in recent years.

GPS devices have also gotten a lot cheaper. According to estimates from iSuppli analyst Richard Robinson, the average price of a personal navigation device will have slipped to $212 by end of 2008, less than half of what it was just three years ago.

That’s exactly why, in the hopes of differentiating themselves and attracting customers, GPS manufacturers are packing their products with all sorts of non-navigation features. Still, analysts say it’s the no-frills, lower-end models that are driving the bulk of demand.

TomTom, the Amsterdam-based maker of GPS gadgets, recently released the GO 930, a $500 device that, like the nuvi 880, comes with a bundle of useless features. This included a document and photo viewer. That said, the Go 930 made it easier for me to get around — even if it didn’t have a fancy voice-recognition system. For starters, the 930 can estimate your travel time using data from previous trips of other TomTom users, not posted speed limits. It can also show you exactly which lane to drive in while navigating through major interchanges.

More importantly, the new TomTom has an intuitive user-interface with a clear and colorful display for reading maps and a not-too-sensitive touchscreen for entering addresses. I didn’t even have to read the manual to figure out how it worked (which is always a bonus).

Hats off to TomTom: Extra features usually means more icons and menus to scroll through and, like many consumer electronics products, ease-of-use — and, of course, accurate directions — are what make or break a GPS device. The TomTom has all kinds of extras, including a music player and FM transmitter, but still makes them easy to access and use.

Some GPS companies, though, have decided that cramming in more and more unnecessary functionalities isn’t the way to go.

Mio, a Taiwanese manufacturer, recently released four devices that are all about going back to the basics. Not only did Mio not add significant new capabilities to its new line, it actually took away some of the bells and whistles that had become a signature of many of its products — things like a music player and photo browsing capability. The new products, the company said in a release last March, were all about emphasizing “straightforward navigation.”

The result is an easy-to-use, simplified GPS device with few menu options that sells for about $250. While testing the Mio Moov 310, I found the device isn’t perfect. For example, I had some difficulties getting used to the not-so-sensitive touchscreen. But the overall experience was good — that is, it got me to where I needed to go. And getting to a destination is exactly why most people buy a personal navigation device in the first place.

“The number of people actually listening to music on their GPS device is probably pretty small,” says Robinson, the iSuppli analyst. “Personal navigation devices are mainly used for navigation.”

Cell phones, on the other hand, says Robinson, are expected to be multifunctional. They’re the devices people want to carry around with them everywhere they go, and use for things like listening to music, looking up online information on the go and snapping pictures. In the past, using navigation features on cell phones — while just as accurate as dedicated GPS devices — hasn’t been the most user-friendly experience. For one, the small screens and cramped keypads made it hard to enter addresses and view maps while driving.

But new mobile devices like the 3G iPhone are more navigation-friendly because of their large displays and touchscreen interface. Prices for GPS services on cell phones are also attractive, as users typically pay a monthly fee of about $10 and can start or stop the service anytime they want.

“There’s a new market emerging which is going to be a real problem for the [personal navigation device] industry,” says Robinson.

That’s probably why Garmin, the Kansas-based GPS manufacturer, has decided that to compete with cell phones in needs to do more than cram multiple features into its high-end devices: Later this year, the company is expected to come out with a hybrid GPS device/cell phone, called the nuvifone.