According to http://www.nytimes.com/2011/04/21/business/21data.html,
Apple faced questions on Wednesday about the security of its iPhone and iPad after a report that the devices regularly record their locations in a hidden file.
The report came from a technology conference in San Francisco, where two computer programmers presented research showing that the iPhone and 3G versions of the iPad began logging usersí locations a year ago, when Apple updated its mobile operating system.
After customers upgraded the software, a new hidden file began periodically storing location data, apparently gleaned from nearby cellphone towers and Wi-Fi networks, along with the time.
The data is stored on a personís phone or iPad, but when the device is synced to a computer, the file is copied over to the hard drive, the programmers said. The data is not normally encrypted; although users can encrypt their information when they sync their devices, few do.