Apple Developer Connection:

If you build your application with features based on a user’s location, make sure these features provide beneficial information. If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store.

Smart move in my opinion. Users get that pop-up window asking to use their current location with the expectation that the app will use that information for actual features not just targeted ads.