Here's an excerpt from the 3G iPhone GPS information page:
iPhone 3G provides GPS-powered location feeds to built-in applications as well as to applications available on the App Store. Take a photo with the camera, for example, and iPhone can geotag it with GPS location information. That way, when you share photos online, friends and family can see where every snapshot was taken. And you can shop the App Store for GPS-enabled applications such as mobile friend finders or interactive city guides.