You can make your iPhone less location aware with iOS 4.3.3.
Apple has just released iOS 4.3.3. As expected this update fixes the issues with location tracking on the iPhone that got uncovered a couple weeks ago. Specifically iOS 4.3.3 reduces the size of the cache in the what Apple calls crowd-sourced location database.
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Additionally the database is not backed up into iTunes and the cache gets deleted completely when location services is turned off. Your iPhone will still track you location and in a future iOS update Apple is supposed to encrypt the cache. Still, you need to be aware that the iPhone and all smartphones for that matter track your location and there are logs on your phone that somebody could read (e.g.: CSI).
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The update is available now via iTunes.