Seriously, I think people are seriously overthinking the photo sharing aspect. That's just the first thing they could think of that seemed like it would have mass appeal, but I imagine the company has little to no interest in private photos or in tracking individual users.
Here's how I see the possible future applications. You go somewhere and use your phone en route. Your phone knows approximately where you are and have been recently with a fair degree of detail. Rather than uploading that information to a server and scaring people away from using it, it listens to a stream of numbers from a server, which represent various different location and/or environmental criteria. The phone matches these with what it knows about itself based on where you've taken it, as if it were playing bingo. Every so often it gets a good match, and then uses that as a hash to look up a particular commercial message - one that has a high probability of being relevant to the owner of the phone based on where they are, where they're going, or where they have an established trail.
So you're traveling up the escalator in a shopping mall, when suddenly your phone shrugs (tm). What is it? That obscure thing you like and searched for last week is in a store 2 minutes walk away. Hardly anyone buys those, so if you go there in the next hour they'll give you 20% off; otherwise it goes back to the wholesaler.