I don't think it's a privacy concern to store such data locally on the phone. In any case, it should be resolved by letting the user decide how long to cache the data; that would make everyone happy.
However, it is included in the iTunes backups. Those can be read -- but only on your computer, not on the iPhone itself.
(An exception to the above would be a jailbroken phone: the packages installed via Cydia would not have the same restrictions, although the recent jailbreaks do not remove the restrictions on apps from the App Store.)
The solution is to properly protect your data on your phone and your computer.
Any malicious desktop tool can easily find the location cache in unencrypted backups. Modern Police Forensics tools (http://www.cellebrite.com/) can easily extract non-encrypted data from phones in minutes (see Michigan Police).
That Apple stored this growing set of user-data in cleartext on the device was as stupid as Sony storing their customer's personal information in cleartext (or weakly hashed) on their servers.
Either bit-recycle the information that's not immediately relevant, or strongly encrypt/sanitize it. This shit isn't rocket-science, folks. Otherwise it's a liability and potential PR nightmare in the making.
We're now still in the "wild west" of personal data records. Once these issues start to snowball and real-life consequences happen, people will clamor for litigation, which given politicians will be over-reaching and ham-fisted.
Corporations with hundreds of millions of users' personal data should stay in front of these issues unless they want to wade in a regulatory mess (see Google's mis-steps with wifi packet data).
You also say that you have little way to protect your data, and then in the next sentence tell me how to do it.
Are you really trying to evaluate the situation, or are you more interested in attempting to criticize in any way that you can stretch words?
How is that secured?