It's Michigan that just passed the law where cops can take your phone (any phone) and download ALL info, including any gps tags. Blackberry is not safe according to fox and msnbc (there, everyone is covered.)
I'm so glad that law isn't here yet. I'd like to see a cop take a phone from one of these good ol boys out here in east Texas. Lol.
The location data is (sometimes) not very specific. It triangulates from cell phone towers your location. The locations could be miles off or within a few blocks. It's transmitted to Apple every 12 hours, and at the moment, it's only accessible if one has access to the computer or can get the phone connected to a computer. So, I'd encrypt your backups, thus encrypting the file that stores the info.
Of note, Android phones do this as well, but the logs are only temporary.
I never have liked anything Apple due to their control reasons. Now I get to say told you so. Happy Droid user here with great Verizon service. They have plenty more phones for you Apple folks also.
Make sure to keep your phone(s) locked at all times (home and on the road).