I would like to use my ipad2 for navigation, can it be upgraded To take a GPS chip
Not within the actual iPad no. There are a few stand-alone GPS units that you can use with the iPad - a search for something like 'iPad GPS reciever' should find something e.g. there is one from Bad Elf that I've seen people mention on here.
As far as I know, hardware upgrades by opening the device and putting something new into it can't be done.
Did you check the Apple shop for equipment that can be connected to the iPad and add some more features?
I think the section is called iPad accessories, equipment working with apps.
Retrieving data ...