Now, I'm no expert on the topic by any stretch of the imagination, but the original iPhone (non-3G) used a mix of cell tower spotting and Wi-Fi location data to approximate the location of the phone. Perhaps the new iPhone uses this method over the GPS in the presence of wireless networks and cell service. It could be more efficient on the battery or not, I am not sure, like I said I am not an expert. 😛 I tend to agree with the suggestions so far, turn off the Wi-Fi and go outside and see what the difference would be