By contrast MobileMe will track your iPhone using the built in GPS device supplemented by WiFi location sniffing and cell tower triangulation.
If you aren't a slave to Apple you may have a phone that works properly with Latitude, enabling free location tracking.
Which brings us to Loopt ...
It looks like AT&T is enabling Loopt to do for $4/month what AT&T wants $15/month for. Seems like a steep discount, but AT&T isn't doing any of the app development or support and nobody was buying AT&T's product anyway.
Daring Fireball Linked List: Loopt Now Optionally Updates Your Location Continually... Via a deal with AT&T, Loopt — a location-based social networking service — can now track and update the location of your iPhone even when the Loopt app isn’t running.
... This is a server-to-server system between Loopt and AT&T. ... it’s a $4 per month addition to your AT&T bill.
In addition to costing about $50 a year (MobileMe is about the same price) the Loopt service can't use the phone's GPS -- it's relying on cell tower triangulation. So the accuracy will be good in dense urban areas, poor in areas with fewer towers.
MobileMe seems like the better option, except, bizarrely but typically, Apple doesn't provide any location sharing option with MobileMe.
FCC, please continue to pummel Apple.