This issue relates to the following issue:
Where capability detection is 'confused' by the PhoneGap libraries. However, this issue is more specific and more critical.
If you write a WP7 PhoneGap application that uses geo-location, this involved no 'native' geolocation API calls, i.e. this uses the WebBrowsers HTML5 geo-location implementation.
If you submit such an app to the marketplace, the automated capability detection which is run on all installed apps will fail to notice that the app uses geo-location and hence this capability will be turned off.
The net result is, you will only discover that geolocation no longer works once your application is published!