I guess "triangulation" by GSM/UTMS/EDGE - anyway I'm pretty sure not by GPS.

GPS based?
+ Doesn't cause more costs
+ Certainly very useful when mounted in the car (GPS connected)
- Unusable without GPS signal - i.e. in the pocket, bag, jacket, house, restaurant, work, ...

aGPS based?
+ only needs a (actually 2-3) GSM signal - wich is the case almost everywhere
- It's WAY too expensive to be of any use at all (even in business it's hardly used)

Location based services ain't new. It just wont work as long as it costs cash.
I am from Austria - we have one of the cheapest mobile networks world-wide.
Still - i don't know anyone using those "services" that cost a hell lot of money (for example aGPS=GSM based=>pay pay pay - either per minute or per MB (I mean pay per MEGAbyte itself makes me laugh/cry...)) - anyway - if i use location based services i don't just use it for some minutes - it must work more or less all the time.
So it's out of question to use such a thing as long as i have to pay extra money.
Additionally - in Europe prices rice infinitely as soon as you cross a border (compare: 1c/min to every network as long as u r in Austria to 49c/min as soon as i cross the border - wich ain't too hard in Eruope).

So - nice google is working on that, yet it might take several years till people are willing to use it.
Btw - There's a group working on an ubuntu port for mobile devices.... if they succeed, who needs Andorid? Android might be good to give canonical (company of Mark Shuttleworth) & the community a big kick up the arse to finally get this mobile software up and running.