This may help to explain the problem".....
Crowd-sourced Wi-Fi and cellular Location Services
If Location Services is on, your device will periodically send the geo-tagged locations of nearby Wi-Fi hotspots and cell towers in an anonymous and encrypted form to Apple, to augment the crowd-sourced database of Wi-Fi hotspot and cell tower locations. In addition, if you are traveling (for example, in a car) and Location Services is on, a GPS-enabled iOS device will also periodically send GPS locations and travel speed information in an anonymous and encrypted form to Apple, to be used for building up a crowd-sourced road traffic database. The crowd-sourced location data gathered by Apple does not personally identify you.
So if Apple made some mistakes with this system then this would account for the gross error locations, remember that my tests showed that the gps worked, but we mainly use the assisted gps system that includes the crowd sourced wi-fi and cellular location services.
This is the link to the full article. http://support.apple.com/kb/ht4995?