Engadget had a short squirt about how MIT is looking at doing location based services. This article: PCWorld.com - Location Reigns Supreme With Future PCs talks about the 'sensor networks' for Cricket that seems to require a lot of infrastructure.
Not quite so elegant as doing IP-geolocation. Since everyone is cultivating wireless networks the infrastructure is already in place. With a little better support of the geographic information in DNS entries, Location-based services would be much more achievable in a shorter term.