This is disastrous to say the least, whatever little privacy was left may completely disappear with this move, hopefully twitter should be smart enough to allow users to control whether or not their geo-locations should be shared with others, otherwise this will cause a much bigger backlash than the issue they created with @replies.
This information may no doubt come in pretty handy to developers and marketing guys, however it should not come at the cost of twitter users.
However as far as I am concerned, twitter would make a big mistake sharing that information without giving me a choice to not share it, if that happens it will hasten the end of twitter to no means.
It has grown immensely only on the power of its users, if they disappoint them and share such information without consent, I believe in addition to a backlash they may also start losing users at a rapid pace.
What are your thoughts about this decision by twitter? Would you want to share the geo-location of your tweets? Let me know.