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I have the iPhone and also received the new update.
I have already used the "current location" feature several times over and I have only experienced an error one time. I was actually located about 10 blocks out of the circle's diameter, the good news is that when I prompted it to give me the directions I needed, they were still entirely accurate.
Perhaps the problem is that there aren't enough cell phone towers in Alaska. In Steve Job's Keynote he said that the way they locate us is via cellphone triangulation. I live in a major metropolitan city so that may be why I dont have the problems...
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