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I understand why apps like Maps need to know my specific location, but is it safe to allow any application to access these things? Are there any clues as to which apps are safe and which aren't?

Also, when I take pictures does it save my longitude and latitude at the time the picture was taken? How can I get to this setting?

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Depending on your phone / software, there should be an option somehwere in the camera app, something about geotagging or storing location data (being the same thing). (Just open the camera app, click menu and scroll through the settings)

As far as app permissions are concerned: Does your app really need your location? Most likely not. Maps, navigation, GPS tools, geocaching tools, foursquare and pretty much any app that is designed to and downloaded because of their handling of location data all need the fine location (well, to be fair, foursquare doesn't as long as you don't use it as a substitute for google places).
Just ask yourself: Does the new version of Angry Birds really need to know where I am? Nah. From then on it's just one of two things:
Either you ignore the permissions since your really like that app, or you stick by your principles and don't download the app.

However, to be safe, simply disable GPS when you're not really using it anyway (for navigation or something), once GPS is disabled, apps won't get your fine location, only your estimated location based on last know location or wifi triangulation or whatever is used to get your estimated location via wifi.

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is it safe to allow any application to access these things?

No. There are malicious apps.

Are there any clues as to which apps are safe and which aren't?

Not really, unless you look at the source code. Generally, you can trust popular, well-rated apps to not be malicious. They might be collecting your info for use in ads, though, and so on. If any info is ever sent from an app to a company's servers, they can use and abuse that data. If you don't trust a company (including trusting their internal security protocols and ability to maintain security, etc.) then don't trust their app.

You can use an app like DroidWall to ensure that apps that don't need it cannot access the network; that doesn't guarantee that they won't delete data on your phone and that sort of thing, but it will guarantee that your data stays private (unless DroidWall is malicious or defective, which I don't think it is, or can be worked around).

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Wanted to add that DroidWall will only work on rooted devices, and makes use of some kernel-level libraries that might not be available on some stock ROMs. While on the subject of custom ROMs, CyanogenMod 7.1 has a feature that allows you to deny any app any permission straight from the management page. Just tap the permission and it will get crossed out, signifying the denial (tap again to undo.) Keep in mind that while most apps handle denial of Internet or GPS permissions well, denying them other more general permissions (e.g. writing to SD Card) might cause instability or even crashes. –  Chahk Sep 6 '11 at 2:24
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There is a setting in the camera for geo location. Go into the camera settings and there should be an option in there.

As for apps that use fine location and whether it is safe, its not always safe. It depends on the developer. Some developers choose to enable the fine location for location based advertising even if the actual app doesn't require it. You can't really tell if it is safe or not or whether it is necessary it mainly comes down to common sense and whether or not you trust the developer.

A way to stop the app using location is to disable the phones GPS which an be found in the settings.

Hope this helps

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