I synced it to my computer, then turned off Location Services immediately. Location information is determined by cell phone towers rather than GPS, and update times are unclear at the moment, relying on the towers themselves and cell phone activity. So judging from just this one test, it appears that by disabling Location Services, my device was stopped from collecting information about my whereabouts.
Since we aren't sure how often location information is collected, it's possible that I just wasn't out at the right time for my data to be collected. While it doesn't seem likely, it may be possible that location data is collected differently on different networks. So at the moment, even if Apple isn't using the information collected from Location Services to track anyone, it looks like turning Location Services off will effectively end any location-related data from being collected.
"This hidden file is neither new nor secret," Alex Levinson, security researcher and senior engineer for Apple iOS-based research company Katana Forensics, wrote on his blog.
Levinson, an author and graduate student at Rochester Institute of Technology, said that prior to the "consolidated.db" file used in the iPhone 4, users' location data was stored on older iPhone models in a similar file, called "h-cells.plist."
Location logs from these pre-iPhone 4 files have been used by "various law enforcement agencies," Levinson said.
Written in 2010, before the June release of the iPhone 4, the paper explained that Apple explicitly offers location tracking ability to third-party app developers; it's called "Core Location Framework Reference."
In the terms and conditions of the iTunes license agreement, necessary to activate an iPhone or iPad, Apple writes, "Apple and our partners and licensees may collect, use, and share precise location data, including the real-time geographic location of your Apple computer or device."
The prompt makes no mention of tracking your location, but clicking "Agree" gives Apple that power.
Hypponen also believes that the iPhone sends its location log to Apple twice a day.