Before foul cries of "big brother" begin to run rampant, it's important to note that Google, at least currently, only makes this information available to the individual user. Further, it is something you actually have to enable manually on a device that has Latitude installed. Unless you make it a habit to give others your smartphone, the feature is unlikely to be turned on accidentally. You also have the option of deleting your history later on.
However, privacy advocates will undoubtedly raise concerns over potential uses of this technology in company-provided equipment or instances where someone doesn't know they are being tracked. Still, Google's inclusion of Latitude's new feature is coming primarily at the behest of user requests -- and what the people want, the people get (according to Google).
The beta "Location Alerts" feature is also included, which allows your "Latitude Friends" to flag you down through alerts. The idea is to prevent someone from constantly checking Latitude to see if friends are nearby, and instead have their phone issue a reminder. It's staggering to think of the amount of data analysis required to make this work on your phone, but it does -- and it's free to try, if you so wish.