I've actually been getting conflicting reports on this. The iPhone 4 does broadcast a unique service over Bonjour when Personal Hotspot is running,
I have ran extensive tests on this using iPhone4 / iPad 1 and iPhone 4 / iPad2. You can find my results on my blog at johnmarshall4 on tumblr. I see NO difference in location tracking being tethered to the iPhone vs. just being on Wifi alone. In fact what some don't realize is that if you load up maps on your iPad and then take off in the car it will track to the map as long as you are within the area of the map that is cached in memory - no tethering required. This is what tricks people, they don't expect it to track at all, so when it does (while tethered) they get all exited. However you'll find that the update rate and accuracy are the same wether tethered or not.
I live in the country however and I'll tell you when I go down a country road with no houses around I get NO location updates, tethered or not. Period.
Here are some things people can do to prove this to themselves:
1. Try to get location out away from Wifi signals. - You won't.
2. While tethered, drive until you stop getting updated and pull over and wait. If the rumors about it just being slow are true then you should get a position update in around a minute. It won't.
3. Tether over Bluetooth with Wifi off. It is just IP packets so the location information from tethering should still come across - it doesn't starting up maps will say "Cannot determine location".
4. Use an app that gives you the actual GPS coordinates like G-Spot. If GPS data were coming from the tethered iPhone they should show the same coords on both devices - they won't.
Sorry for the ramble. As you can tell I've tried and documented all these methods. I don't want people's iPad 2 purchasing decision (Wi-Fi vs. 3G) to be swayed by all the internet buzz regarding this. Of course trying to stop an Internet myth is like trying to stop a giant snowball rolling down a hill. At least I can say I tried.