If re-designing a dash and short for space, is a mechanical compass still a necessity (bearing in mind that iPhones and other electronic navigation systems have them)?
Iphone is a shite compass and if all else fails at least you have compass and (hopefully) charts. I have had a complete electrical failure and I wouldn't want to reply on an iphone. Especially bearing in mind how fast the battery runs down when the screen is constantly on. That and the sunlight viewable properties of iphone/ipad are ruvbbish
I would always like to have a dash-mounted compass but, if space is at a premium, I would personally prefer just have a hand-bearing magnetic compass rather than make room for a dash-mounted one.
In the emergency situation when you need a compass it's much easier to be sure that a hand-bearing compass is well away from sources of deviation.
I take it you mean a traditional magnetic compass.
My first answer would be a simple yes.
Really it depends on the size of boat, where you are using it and what else you have available.
I didn't have one fitted on my small run about, but I always carried a compass in my bag. not ideal to steer by, but I was not intending to head out in fog.
My current small run about for fishing had one fitted but it was unreadable I have not replaced yet. using a hand compass. I don't have one on my tender.
when I go fishing on a lake, I didn't take a compass.
If your boat is a bit bigger I would suggest you have a magnetic compass of some kind. portable or fitted. even if you have flux gate or other compass for an auto pilot.
Even being out after dark, or far enough out to loose sight of land. a compass is certainly reassuring maybe even necessary. GPS and plotters might make it seem redundant. but just as a back up it should be there.