Seems as though I'm one of the only people that hasn't noticed any real effect on battery life, despite having the GPS icon displayed all day. I was a little nervous at first but like I said I haven't noticed a difference.
I'm using a 4s, but not sure if that would make any difference.
I may be wrong, but from my understanding I would think that disabling location reporting would cripple parts of the service? Eg. What time I leave for work etc.