As smartphone apps and hardware become more location-aware, technology is once again revealed as a double-edged sword.

In a report published yesterday by independent researchers Alasdair Allan and Pete Warden, Apple’s iPhone was revealed to be keeping an awful close watch of its owners.

The pair say that the iPhone is constantly recording time-stamped GPS coordinates in a consolidated file, which is then stored on the user’s computer when they sync their phone with iTunes.

While Alasdair and Warden admit that “there’s no evidence that [the information] is being transmitted beyond your device and any machines you sync it with,” they do feel it’s a problem.

“The most immediate problem is that this data is stored in an easily-readable form on your machine,” they write on their website. “Any other program you run or [a] user with access to your machine can look through it.”

The more fundamental problem, the pair contends, is that Apple is collecting this information at all. While carriers collect similar data almost inevitably as part of their operations, that record is kept behind their firewall. That information normally requires a court order to gain access to it, whereas this is available to anyone who can get their hands on the user’s phone or computer.

A report released yesterday by The Nielsen Company contends that although check-in services appear to be growing in popularity, many smartphone users are still reticent to share information about their geographic location.

Nielsen reports that most mobile app downloaders, which Nielsen defines as those mobile subscribers who have downloaded an application in the past 30 days, are concerned about privacy when it comes to sharing their location via mobile phone. Women app downloaders are more likely to be concerned, with 59 percent reporting they have privacy concerns compared to 52 percent of male app downloaders.

While Nielsen predicts that users will increasingly become more comfortable with location tracking as they gain familiarity with location-based apps, they’re probably not referring to the kind of unregulated tracking that the iPhone is doing.

The problem is of enough concern that it prompted Senator Al Franken (D- Minn.) to pen an open letter to Apple CEO Steve Jobs, which was posted at cultofmac.com. Franken takes issue with not only the practice itself but also with the fact that the data is left unencrypted.

“Anyone who gains access to this single file could likely determine the location of a user’s home, the business he frequents, the doctors he visits, the schools his children attends, and the trips he has taken — over the past months or even a year,” Franken wrote.

The letter goes on to ask nine pointed questions concerning how the data is generated and what steps Apple will take to ensure that this information is kept private. Apple has yet to release an official comment on the matter and could not be reached before press time.

Check out a discussion between Alasdair and Warden about their findings: