Droidist since 12/1/09
It sounds like you both are using the network locations and not the GPS. How big is the 'blue circle' around your location point? Even as poor as GoogleMaps is (as far as mislabeled and/or missing streets ect. the GPS accurately reports the locations.
You are right to be wary. There is much bullcrap. Be wary of me too, because I may be wrong. Make up your own mind after you evaluate all the evidence and the logic. - Mark Rippetoe
When I got my Droid in January, the maps app showed me dead on where I was. Since the update it has not been nearly as accurate. I had both wireless and GPS checked and when I unchecked wireless it actually moved me a bit farther from my actual location. It's not off by much, but could be an issue if I actually needed to use navigation.
Seems to be related to the update...