The iPhone's fake GPS is a useful feature, and stops you from looking too much like a map-studying tourist when in foreign lands, but the new iPhone 2.0 update will bring the service one step closer to real GPS. It still uses cell tower and WiFi triangulation, but will be able to update in real time as you walk (or drive) around.
Your position is represented on screen by a pulsing blue ball which moves as you do. That's a lot easier to use than the current method of stopping and hitting the "Locate Me" button every few steps.
iPhone OS 2.0 includes live location tracking [iPhone Atlas]
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