There's a bit of a discussion floating around these days regarding the ability of the iPhone 4 Personal Hotspot to add GPS geolocation data to a Wi-Fi only iPad. This got started with an Urbanape post by blogger Zachary Bir in which he described being able to put his iPhone 4 in Personal Hotspot mode, make a connection to the phone with his original Wi-Fi iPad, and then watch on Google Maps on the iPad as the "blue dot" followed his car precisely on the road.
Some bloggers have been saying that they believe this is just the iPad using the standard Wi-Fi geolocation that's available on laptops and other devices, but I agree with Bir that he's getting true GPS information transferred to the iPad from his iPhone 4. WIRED seems to agree. The reason? Most of the standard 3G "mobile hotspots," such as the Novatel MiFi, send GPS information to connected devices as well.
Many of the providers of mobile hotspots, including Sprint and Verizon, make a big deal out of the fact that these hotspots provide accurate location information. Sprint, for example, provides Mac OS X and Windows software with the MiFi that can be used to find local services based on your current location.
I was able to test the GPS capability on an original iPad using the iPhone 4 Personal Hotspot, and I found the locations to be quite accurate on Google Maps. I tried testing the location service on the Geocaching.com website, and I found that not only were my coordinates listed very accurately, but I was also able to use the site's search function to look for nearby caches. The only way the iPad could be getting the GPS coordinates was by using the iPhone 4 Personal Hotspot, since I had the device in a greenbelt away from any Wi-Fi signals.
Bir notes that he has decided to forego the 3G version of the iPad this time as a result of his tests. For many people, that extra $130 can go for more storage in a new iPad 2.