If you iPhone or iPod is not able to connect to your WLAN after the update to iOS 5, you should first check the settings of you WLAN-Router. If you do not broadcast your SSID change this setting.
Apple recommends to disable the hidden network:
http://support.apple.com/kb/HT4199
http://support.apple.com/kb/HT4199?viewlocale=de_DE
IPhone and IPad store you position in a secret file on your device. After a backup with iTunes the file is also on your PC and can be read with this software: http://www.chip.de/downloads/iPhoneTrackerWin_48607289.html
In the moment it is not clear if Apple uses this information for advertisment of if they sell this information to others.
More information can be found e.g. on the website of the (german) Tagesschau:
http://www.tagesschau.de/multimedia/video/sendungsbeitrag106548.html