Well, that didn't take too long. Apple just released iOS 4.3.3 for GSM iPhones and iOS 4.2.8 for Verizon units, which includes three specific changes to address the location tracking controversy. First, and most importantly, the cell-tower and WiFi hotspot location cache is no longer backed up to iTunes, which will stop apps like iPhone Location Tracker from working so easily. Second, the size of the cache has been reduced to just seven days worth of data, which is all Apple says the iPhone really needs -- Scott Forstall has said the initial decision was to set aside a seemingly-small 2MB of space for the cache, which unfortunately turned out to be enough for years of location data. (We'd guess the new cache is much, much smaller.) And lastly, the truly paranoid can simply turn Location Services off, which will delete the cache entirely.
Of course, the story isn't quite over yet -- Apple's promised that the next major version of iOS will encrypt the on-device location cache, which is really the last piece in completely securing user location data. And we're sure Congress will have plenty of questions for Apple and Google both on May 10 when it holds a hearing on location tracking -- and we'll be there to cover it all.