In Google's recent Google Friends Newsletter we have this tidbit:
Google Maps for mobile, now with My Location (beta)
GPS-enabled mobile phones continue to rise in popularity - but most of us do not have that capability. Now, with the latest version of Google Maps for mobile, you can use the new My Location (beta) technology that uses normal cell phone towers to provide you with approximate location information. It's not GPS, but it comes pretty close. http://www.google.com/gmm
Cool stuff. The really interesting thing about this is the ability Google could eventually have to track location and correlate that to better target ads on the iPhone.