Over the last couple of years, location-sensors have become ubiquitous. When we first bought an iPhone 3G, Dan and I were super-excited because it was the first device we'd ever owned that was both programmable and contained a GPS. Obviously, there are lots of useful things that you can do with a programmable GPS. For example, you could create navigation software, but we didn't do that. We were really excited to follow up on Dan's idea that a GPS sensor is just a new type of game controller (like the analog stick or the wiimote).
Using our iPhone 3G, we did a bunch of experiments and determined that the location updates come in about once per second. Once per second updates are great for a game like Seek 'n Spell, which is played in an area about the size of a soccer field, but you'd need faster updates to play in a smaller area. This is because a smaller area in the real world with a fixed screen size implies a greater zoom level, which, in turn, implies that the slow updates are more noticeable. Since Seek 'n Spell is on the very edge of what is possible with an iPhone 3G, we went ahead and built it at Debacle 2009!
As technology marches on, location sensors will get better, and I predict that we'll see people making all kinds of interesting games. At some point, we'll see location-based games that can be played in your front yard, in dense urban environments or even indoors. Of course, faster updating, more accurate sensors will also improve the experience for all of the existing games.
In any case, it definitely feels like we're on the verge of a big boom in location-based gaming!