The UI isnt easy. It could be as simple as giving showing the distance to the other user in the contacts applet in case both are online. Mine could show:

===========
| O zerojay (6220km)
| O Reggie
| O Texrat (0.02km)
|
===========

Lat/Lon/... would be available via some "details"-button.

Instead you could also just mark those within a certain range (symbol, bold letters, whatever) - maybe its not very interesting to know exactly how far people are away from me if its always more than 5km because they live on a different continent. Its only meaningful when they're within "hey, lets meet right now"-distance.

Ah, yes, and of course there has to be a map somewhere deeper in the UI that shows the avatars right where they are.