MacWorld just announced that Google Latitude had finally been released for the iPhone, but as a web-app as opposed to a proprietary app downloaded from the App Store. See here for details: http://www.macworld.com/article/141891/2009/07/google_latitude_iphone.html
The browser-based model is much more in line with Google's vision, I think. There are a lot of apps in the app store that would be more appropriate as web apps. Also, Safari would be able to relay location to Google with a higher frequency than opening an installed app, since the apps only run while they are open, and the browser would be active more often, e.g. when using Google Reader.