I enabled Google Latitude on my mobile phone, just to have a look at how it works. I must say it works pretty well. I had expected it to do so as the Google Maps program on my Nokia E51 was already pretty accurate in finding where I was. (600 meters is good enough in general).
Most of the time it seems to be using the GSM Cell-ID. The accuracy it provides is a good indicator. GSM is between 600 and 1500 meters, sometimes less. However, at home it's different. At home, in my house, the accuracy is off by 100 kilometers. The location it gives is the location of my old home in Rotterdam. I now live in Almere as of two months. I figured out that anywhere around the house where my wifi access point isn't visible, that's where I am in Almere, but not when my access point is visible. :-)
So if ever Google Latitude tells you you are in Rotterdam, while you are certain you are in Almere, that's when your within 30 meters of my house