This week Google announced Mobile Search with My Location, for devices running on Windows Mobile. By either using GPS or cell-ID, Google can tap into your location and deliver location-specific information.
Previously, the system returned results based on the last location entered. The new Search with My Location feature will be able to give much more precise results.
You have to specifically opt in to use the service and you can always change that setting. Google assures users that personally identifiable information is never associated with you location. At least we know they have privacy issues on the brain.