A mobile phone's location can be easily determined through the network or, where installed, through GPS. There are many opportunities to use this information to provide services based around the location - traffic and travel are two examples of successful applications in this area.
The biggest downside with these services are the cost of determining and phone's location (or location hit) due to charges made by phone networks. Additionally in the UK the cost of a geo location - translating the post code into a map position - makes LBS even more expensive. However, in certainly applications, LBS is still worthwhile, if the benefit to the user is perceived as significant.