Your iPhone constantly tracks everywhere you go and records the data on the phone (OUTSIDE AND IN ADDITION TO THE 'ALLOW TO USE MY LOCATION' GPS DATA), transferring it to your computer (and transmitting it to Apple) upon sync. It doesn't actually let you know its doing it, but your jealous girlfriend will -- with a knife while you sleep. Nighty night boob-oogler.
The location info is easy to access, both on your phone (or iPad) or on any computer that you've synced it to. The location info appears to rely on tower triangulation rather than GPS data, meaning it locates you even if you have location services switched off.
The most immediate problem is that this data is stored in an easily-readable form on your machine. Any other program you run or user with access to your machine can look through it.
The more fundamental problem is that Apple are collecting this information at all. Cell-phone providers collect similar data almost inevitably as part of their operations, but it's kept behind their firewall. It normally requires a court order to gain access to it, whereas this is available to anyone who can get their hands on your phone or computer.
Uh-oh. You can go HERE to download the software to access your phone's data and create a map if you're so inclined, but I encourage you to smash your iPhone, delete iTunes, and get a GoPhone just to be on the safe side. Also, try to make as many of your calls from pay phones as possible. I happen to know of one just a couple blocks from my house that still has a phone book. I doodle penises in it while I make my calls. "Short and fat or long and skinny ones?" I'm glad you asked. NOT! F***ing weirdo.
Thanks to kitty, Esteban, Jared, Cliff Clipper and Pharris, who don't care if anybody accesses their iPhone location data because they only rock pagers. WHAT ARE YOU, DRUG DEALERS?! Happy 4/20.