Google has released an update to their Android Maps Navigation app that uses current traffic information when determining the fastest route to a destination. Maps has long had a traffic layer, but that information only displays in color coding on the map and was not taken into account when Navigation determined a route.
You don’t need to do anything special to have Navigation use traffic information, it is now automatically taken into account. Navigation actually determines several routes to a destination and selects the fastest route. To see all of the route options, tap Menu, Route Info and then tap the Routes button, which is the second button from the right. Current traffic information displays on the map of the routes, which shows you what traffic conditions you may wish to avoid.
Android phone users should have seen an app update notification this afternoon, otherwise, you can start the Android Market and Maps should be listed as one of the apps for which there is an update.