It is really bad, and if navigating a city is one of your key phone usage scenarios, this change makes Apple's arch-rival's devices significantly more attractive than they otherwise would be.
I carry around both the latest Apple phone and the latest Google phone, and this is one area where the Google phone was already significantly superior, even before this fairly astonishing regression in iOS 6. Now the gap is much wider.
Google could (mostly) fix that for Apple by releasing a Google maps app, but why should they?
Wait six months: increases the pain iOS users feel, and possibly increases migration to Android, but by how much? If you've bought an iPhone 5, in many cases that means a 1-year contract (or renewal). And in six months, Apple may have released a better Maps app that fixes the problem.
Release Google Maps for iOS sooner: iPhone users feel less pain, but Google Maps keeps more users.
Actually though, the more I think of it, even in the latter scenario, Apple still wins, because whenever they release their fixed Maps app, they win back the entire market because they own the platform. So maybe the first strategy actually makes more sense.
While there are people who are loyal Apple fans, there are some that are on the fence. This might be enough to push them over to Android or Windows Phone.
Once you go to another platform, you're likely locked into a 2-year contract and it's going to be hard for Apple to get them back.
I think it would be very interesting though to see what would happen if Apple did face some sort of collateral damage whether for this or some other decision. Apple hasn't exactly found itself in many tight spots, or at least doesn't let it show. If a significant chunk of users left and Apple decided it was worth it to get them back, the fastest way to get over the contract hump is just what they've done occasionally in the past: cut the price, aggressively. Of course, this might not be realistic except in some warped little technodoomsday scenario, but still... I wonder...
I'm betting Apple won't fix it in 6 months unless they start buying map corps.