This might be helpful:
http://electronics.h...m/gps-phone.htm
There are indeed privacy issues with GPS-enabled phones, and from what I've read, most phones sold in the US since 2005 have been required by the FCC to have GPS built-in to provide location for E911 service. If you currently have, say, a recent Nokia, you're probably
already transmitting your location to the phone network. How easy it is for a random person to access your location info is something I don't know.
Unless Apple has done something really evil and/or boneheaded, there is no "location beacon" in the iPhone 3G that transmits your location willy-nilly to everyone. The Loopt service is software that you'll install or access on the iPhone 3G that transmits your location to your friends, so it's completely opt-in. If you don't use Loopt, you're not transmitting to them.
As for showing you where you are driving at the moment, that has nothing to do with a "beacon". The iPhone is just calculating your location (based on GPS, or WiFi and cell towers) and displaying where you are (which the iPhone v1 does
right now, sans GPS). That TomTom in your car is doing the same thing, and it
never communicates back to the GPS satellites.