Foursquare opens a whole spectrum of indirect interaction between business owners and their clientèle. The game mechanics are little more than a usability technique.
And really, this is the not-so-secret behind most privacy-threatening trends and technologies: most people will gladly give up their privacy for a [ sense of safety, comment from a friend, virtual badge ].
And if that is the value that most of the world places on their privacy, maybe there's nothing wrong with losing it.
I can understand that if you're at home on the toilet or something you'd want to keep that private. But when you're walking around the city, or going to a shop, those are public spaces. Therefore it's not private information that you would be divulging, as anyone in that location would have that same information.
Then if you didn't want people to know where you are online you would change the settings, or just not use the application. This is just another example of Clay Shirky's idea of Filter Failure.