Code:
PDA: I7500XXJC1
Phone: I7500XXJB2
H/W: MP 0.400
RFCallDate: 2009.06.28
CSC: I7500ITVJC1
By the way, I _haven't_ set 'allow google to use location'.
However, if the 'wireless location' setting really fixes the bug for you, does 'wireless location' work for you? (for me it works fine). Otherwise it might be a bug where your phone encounters an error trying to compute a location. Maybe the location reported by some gsm antennae is faulty?
I think everyone with the bug should write in which country and with which service provider they have this problem, that might shed more light on the source of the problem.