“If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store.”

Why does this suck? Because it doesn’t allow developers or advertisers to deliver relevant ads to users depending on where they are. There is a caveat however. If your app is a location-based app, it’s OK to serve geo-targeted ads. If your app is a game, rejected. Apple claims that this is to protect the user experience but really, how would serving location-based ads in a game comprise the user experience?

The real reason, as most see it, is to leverage their recent purchase of the Quattro ad network which will most likely be integrated into the iPhone development SDK.