GPXView will load the .gpx or .loc files for GeoCaching. I haven't used it (yet) for geocaching, but I entered in some coordinates and used the compass to navigate while driving.

A good combination would be Maemo Mapper to get a visual representation of where you need to go (with street view, satellite and topography maps if they are all still working) and GPX view for a more traditional geocaching experience.

One catch to get the compass to work correctly is you need to be moving so the GPS can tell which direction your heading in order to calculate which way you need to go. I think there is an option to lock the compass.

If you sign up to geocaching.com you can search and download geocaches in .loc format (.gpx with a subscription). These can then be imported to gpxview. There is an option to check all and download at the bottom of the page after you do a search.

As for the reliability of the GPS, if your really worried, you can get an external bluetooth, but I've never really had any problems with the GPS. Once you get a fix, it holds that fix pretty well. Unless you go somewhere that messes up the signal (blocked or reflected GPS signals) that you should be fine. The only place I've encountered unreliable GPS data is when driving in downtown areas of big cities.