If you type an airport code in the Maps search box (such as "MXP" for Milan, Italy) it will center the map on the respective airport. From there, you will be able to quickly move to the city center. A list of airport codes can be found here.

The iPhone, starting with firmware 1.1.3, features a geopositioning system what works by triangulating on both cell towers and Wi-Fi access points. This produces approximate geographical coordinates that can be shown on a map.

To use this feature launch the Maps application, and tap the icon on the bottom-left corner of the screen.
Note that this features requires you to have an active wi-fi or EDGE connection (this is used to download the coordinates of the cell towers).

Check out this page on Wikipedia for more technical information about GSM localization.