After much research, I found out a few things about the cell towers and GPS in regards to Google Latitude.
When you have the Maps program on, your GPS will turn on and you'll get a precise location. When you have it off, Google Latitude will use the cell towers to pick up your location automatically in the background. So it might show you at wherever the closest tower is. This will be when you look at your location on a computer browser. Your location will be updated depending on your movement, speed, and other unknown factors. Sometimes it can take over an hour to update. If you make a phone call, that will also trigger an update to the Google Latitude server. Remember, this is for when your Maps program is off and it is doing it quietly in the background.
So if you go into Menu -> Setup -> Location...you need all 3 boxes checked for the location service to work properly (Wireless, Location Setting, GPS). If you only have GPS and Location Setting checked, then Latitude will only update either manually by turning on Maps, or when you make a phone call. If you only have GPS set, then making a phone call won't update your location.
Also, I found that if you uncheck "Enable always-on Mobile", the GPS might have trouble broadcasting once your 3G goes to sleep. So don't do it.
That's found in the Wireless Controls setting.