When this story broke this morning, my first thought was "this must be something related to or used by the MobileMe 'Find My iPhone' feature." I'm not entirely convinced of that, but I'm willing to wait for the official 'reality distortion field' answer before I start grumbling. Even then it may not really bother me.... It's not terribly different from how my car phone provider back in the mid-90s provided triangulation "guesses" for call locations. (It's just always on.... but in that respect so is my phone.)
What does bother me, though, is how easy this data is to get to.
All of the data on your phone is easy to get to. If privacy is a concern then you should encrypt your backups (regardless of which smartphone you happen to use).
What does bother me, though, is how easy this data is to get to.