Google Maps thinks in Seattle WA-why iPhone 3G

It may be the 3G triangulation that is causing it: put it into Airplane mode then try to do the locate.
MacPro Dual Core 2.66 Ghz, MacBook Pro 15", iPhone 3G Mac OS X (10.5.5) AEXs, Red 2G Nano, Red Shuffle, 16GB Touch, 160 GB Classic, White 60GB 5G

Airplane mode disables GPS.

There have been frequent reports of Seattle - Detroit mix ups.
This is the fault of the Cell Towers, where the iPhone gets its first hint about where you are. The towers are broadcasting the wrong info.
So the solution is to go out side, so the phone can have a clear view of the sky
and give it LOTS of time to get a fix. It takes longer when it has to work out that the hint give by the towers was wrong, but it will eventually get it right.
Also try turning off 3g, and see if the EDGE towers report a correct hint.
If that helps, grouse to your local ATT offices that their towers are wrong.

What could be incorrect is the A-GPS servers database, which usually looks up the cell id to give back a first location estimate (along with the satellite assistance info).
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A GPS receiver requires two sets of data with which to determine location in conjunction with the real-time signals received from the satellites. These are known as almanac and ephemeris data. Normally (a non-assisted GPS receiver), these are obtained from the GPS satellites. Worst case, it can take 12-15 minutes for these files to be downloaded from the satellites.
With Assisted-GPS (as found in the 3G), the device will attempt to get a partial set of almanac/ephemeris data from the A-GPS server, based on where the iPhone thinks it is. This data is transmitted to the iPhone over the cellular data connection (3G or EDGE), or a WiFi connection, whichever is available. If your nearby AT&T cell tower is not correctly identified (bug in the tower CellID info, or an error in the A-GPS server), the iPhone will be given bad ephemeris data. It will then calculate its location based on signals from the GPS satellites and the faulty ephemeris data. That could explain why Detroit becomes Seattle.
Based on whats been reported in the many discussion threads concerning broken GPS, it appears that once the iPhone has obtained (faulty) assist data from the A-GPS server, it doesnt bother to keep listening to the data broadcast from the sky so it never receives correct ephemeris/almanac data.
Like many others, my 3G lost its GPS function after the update to v2.1. I eventually got it working by removing SIM card (so as to disable EDGE and 3G data), turned off WiFi and went outside for 20 minutes. Eventually, the GPS locking in to my location, with the pulsing blue dot. With no A-GPS server to fall back on, I surmise that the GPS receiver had downloaded the almanac/ephemeris data, and was thus able to obtain an accurate GPS location. Then I put the SIM card back in. My Location Services has been working fine since.
@MobileDev - it would be helpful if you could take your Seattle-based 3G outside (in clear view of sky) and wait a while to see if it eventually obtains the sky data and realizes that it is really in Detroit. That would confirm if this hypothesis is correct.
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