Apple responded to the controversy over the location logging file that was making its round through the media last week.
- The file is an appropriate, relevant subset of data (cache) from a crowd-sourced database to aid in speeding up location locks when a user requests their position. (I was right)
- When a user authorizes a position request, Apple does receive data about the geo-coordinates of nearby cell towers and Wi-Fi hotspots to add to the crowd-sourced database. This data is encrypted and anonymous.
- The cache shouldn't be storing nearly a year's worth of data. It should be closer to a week. This will be fixed in the coming weeks via a software update.
- The same update will fix a bug in which the iPhone still collects this data even if Location Services are turned off.
- The update will also remove the cache from iPhone backups.
The entire Q&A is worth a read. It satisfies all of my questions.