A report in The New York Times claims that Apple has disabled the GPS functionality of the iPhone 3G at the request of the Egyptian government due to concerns over possible anti-military/anti-Egyptian applications.
What on earth in an "anti-Egyptian application" anyway? Would Apple ever let such a thing through the iTunes approval process?
The real concern appears to be that the GPS feature in the iPhone 3G could be used by terrorists to acquire hyper-accurate latitude and longitude coordinates on specific targets, like the pyramids, "so that they could execute attacks."
The iPhone 3G went on sale in Egypt (sans GPS) on 22 August via Orange and Vodafone. The easiest way to get a GPS-capable iPhone in Egypt? Import it. The GPS chip in iPhones purchased elsewhere still work when in Egypt and there's not much that the Egyptian government can do about it.
The real question is that if Apple is willing to concede the GPS feature to Egypt, what will it do for China?