The 2G can be surprisingly accurate at times, with just triangulation and wifi. Triangulation can often get a location within a block or so, and wifi locating can often peg your location within a house or two. Of course, that assumes that triangulation can be done, and that the nearby wifi access points are in the wifi database.
(I was really surprised to find that my home's wifi is in their database, as I live at the far edge of the suburbs -- I wonder if they have more cars driving around neighborhoods than google's street mappers.)
Of course, triangulation can be amazingly inaccurate, too, especially if the phone can see far away cell towers.