This is interesting because just last week I created a Google Maps Mashup of users last X number of tweets. While looking at the Twitter API related to user tweets I found out that Twitter does store location information with each status update. However the way this worked was I had to update my location (via tweetie) on my iPhone and this updated location would be attached to my next status update. So hopefully with the new API the tweet location update process would be much simpler.
Here’s an example of Tweets(status updates) with location information. User is Zoe Griffin a “Celebrity Gossip Columnist” from UK. The map moves on to the next location after every 8 seconds.
http://www.mibazaar.com/mytweets.php?uid=zoegriffin (replace the user id at the end with your twitter id. However do update your location before updating your status)
View Larger Map