Whatever you do, don't forget about privacy features. One of my friends used to work on an app called Twinkle for iPhone (
http://tapulous.com/twinkle/)...it's a twitter client with their own custom location feature so you can get all the nearby tweets (using their backend, because Twitter doesn't support it yet). The only reason why I refuse to use it with the location feature enabled is because I am thoroughly creeped out by some of the people close to me (
http://www.flickr.com/photos/chix0r/2788921744/, you get the idea). Only with the recently released 1.2 is there a blocking feature, but that sucks when it's a different person bothering you every time. In fact, Twinkle probably wouldn't be the only app I have a problem with...anything that publicly announces my location gets on my nerves. I don't mind if friends know, but announcing it to the public is something else.
Another consideration is that a user might want to continue in a conversation even though they're not in a location. I could actually maybe even see this as a benefit, if I wanted to join in on a conversation between people at, say, a conference without actually being there.