There are unconfirmed rumors via various Mac blogs (GearLive which has photos of what is claimed to be the new update, and this was commented on at MacRumors and The Unofficial Apple Weblog) that the iPhone will soon be getting a firmware update which will add "locate me" functionality to Google Maps. This functionality was released a month or so ago on other Google Maps Mobile platforms, as Ed Parsons and others reported, so it would certainly make sense for it to appear on the iPhone sometime soon. It uses cell tower information to give an approximate location (reports seem to suggest accuracy to within a few hundred meters in urban locations, and lower accuracy in rural locations). Glenn at AnyGeo also just posted about a hardware add-on called locoGPS which will provide real GPS on the iPhone, which of course will give a more accurate location. This currently requires a Jail Broken iPhone (i.e. one that has been hacked to allow third party applications to be installed), but presumably this will change when Apple opens up the iPhone to third party apps in the next few months.
The report at GearLive also says that the new release of iPhone Google Maps will support the hybrid display mode (it currently just provides "Map" and "Satellite" displays), and the new Options screen that they show also adds a new "Drop pin" function, presumably for visually marking a location on the map.
So one way or another, it looks as though hopefully the location determination options for us iPhone owners will be improving soon!