Just remember, No matter where you go, there you are.
Multichannel, multichannel, multichannel. For online businesses, it is simultaneously the New Promised Land as well as The Impending Doom. I’ve discussed before how I think Amazon will ultimately see its greatest threat come from Walmart, and may actually acquire Target or Sears in order to pre-empt the risk of a competitor that can offer online deals as well as physical storefronts. The same could be said for Best Buy over NewEgg.com, REI over backcountry.com, or even Dave & Busters over Gamestop.com.
Along the same lines, I think Facebook’s recent addition of ‘facebook places‘ isn’t merely trying to push out fourquare or gowalla for eyeball share– quite the opposite– they seem to be warmly welcoming those partners into the fold. All Facebook wants is everyone’s current GPS coordinates, regardless of who tricks the user into surrendering them. Why? Because once Facebook has your 10-20, it can turn around and drop a dime on you to all those potential location-sensitive advertisers. Facebook has the opportunity to beat Google at it’s own game. Think Multichannel. Think Mobile. Think Minority Report, much sooner and much worse than anticipated.
Google must realize this also, hence its mad rush to buy up some social network providers along with location-triggered services. I fear it may be too late for Mountain View, however– everyone has their personal troupe/network built out on Facebook, and they’ll be loathe to do it again somewhere else.
The other risk here is that the proletariat may rise up in rebellion against constantly announcing their whereabouts, but if there are free lattes involved, I wouldn’t be surprised to see people surrender their bank card PINs.
I promise I'm relevant 
I would be in line with the rebellion over the surrendering of my GPS coordinates, but then I remembered in the age of Narus and LexisNexis, et al, privacy on the internet is a misnomer. The best we can hope for these days is distinct domains for your private data, with tiered access constraints for each. A classic example is pharmacy records. The is very valid need for this information to be shared with a distinct group. Thus your doctor, and the Rite Aid in Compton that does not ask many questions can make sure your blood pressure medication will not conflict with the galaxy of other uppers, downers, laughter and screamers you may be taking at the time. Granted Blockbuster has no legitimate need for this data, but them knowing that you just went into a pharmacy in Compton seems like the lower hanging fruit that would not be private per se. Your physical location while not inside your home (the location of which is also provided currently through numerous sources) does not seem like you would even have a reasonable expectation of privacy anyhow.
What is most noteworthy for me is this shows a branch out from the duopoly of monetizing internet traffic beyond the selling ads and selling subscriptions to premium content model. While location data does make the placement of ads more effective, the relationships that can be derived from the aggregate analysis of that location data branches into areas far more wide scope than just ad placement. One of the first determinants of the location of brick and mortar businesses is foot traffic statistics and curb appeal, while the latter will not be any easier to determine, the former will. Analytics that can be used beyond the scope of ad placement allows their revenue stream to be more diverse than the almighty G who cannot break out of their ad centric business model. Should anything happen to AdWords, Mountain View will be in a world of hurt. This shows that facebook is very much in that boat as well currently, but is in motion toward more diverse revenue stream.