Or it could ask me to identify locations that I care to have context-aware functionality for -- and then not build a complete history of my movements, with all the associated privacy risks involved, just so that it can guess at what's important to me.
This is my core complaint with Google Now as well. This "track everything and try to sift meaning out of the data" approach is not the only way. It requires someone amass have a massive pile of data on me that I am flatly uncomfortable with.
There's the concern about corporate data sharing/selling, corporate data breaches and now the NSA. It's flatly Just Not Worth It, just so that my phone can spare me the trouble of manually entering a handful of addresses. (Most of the addresses I care about are already in my contacts list.)
That telcos have this information is itself a fault in the system. Not an excuse to give it to everyone.
You're right, it's not the only way. That's why I leave only location history on and turn off everything else. I get weather, appointments, stocks and directions to home.
WiFi network + frequent location can probably put you at your house, your office, or your bus stop almost instantaneously (with corrections coming as GPS updates), meaning that using location-based services like Find my iPhone, map routing, or (my most frequent use case) nearest bus stops and their times, can be accomplished much faster and with less battery life.
Likewise, a poor GPS location + frequent locations can narrow you down much faster even with WiFi turned off.
As long as this data is stored only on my phone and not provided wholesale to applications, I'm fine with it; otherwise, it's concerning.
If the NSA wants to track you, there's far simpler ways than asking Apple to build a new product feature than can be disabled.
It's not about when the NSA wants to explicitly track you. It's about things like their "3 step" policy, where they search this bulk data for anyone within 3 degrees of separation of an alleged "person of interest".
What happens if they start working in your location data to (attempt to) infer degrees of separation? And now you're getting searched/visited/explicitly tracked/placed on the 'more-thorough screening' list at the TSA, because you happened to take some MMA classes at the 'wrong' gym in Boston and your web history had some keyword hits.
However, I'm fairly certain they can already do that by tracking cellphone activity in terms of ping back to the network and asking the telcos to turn it over. This would just give them it in a more targeted capacity.
I don't know...letting a plethora of private entities collect and aggregate user data for easy access with (or without in many cases) a court order seems almost like the epitome of simplicity. Most of the hard work (both resource-wise and legal) has been done for you or is easy to do. Just cause one could design a simpler system of acquiring user data doesn't mean that features like this aren't profoundly simple and useful to them.
I take your point though, that the NSA doesn't need to direct a company to code features that collect data...because so many companies already do. It's a waste of their breath. They just need to concentrate on grabbing what has already been grabbed. We've been the product for a long time now, and we're either being sold to the government, or the government is taking what they want under (il)legal cover.