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Users can also enable or disable location by app in the settings menu. Apple is including a little arrow on the location services menu that will let you know if that particular app has used location within the last 24 hours.
Forstall demos the next new service, background location. He says there are two classes of applications--things like turn-by-turn directions (TomTom, Garmin, et. al.) and social-networking applications like Loopt.
Photo credit: James Martin