For your entertainment I present these two article titles by two respected web publications:
CNET reports Windows Phone transmits to Microsoft a miniature data dump including a unique device ID, details about nearby Wi-Fi networks, and the phone’s GPS-derived exact latitude and longitude.
PCMag reports Microsoft told PCMag unequivocally that phones running Windows Phone 7 do not store location history.
So, which title and pronoucement is correct? Oddly enough, both are correct since location history is not stored on each Windows Phone device. However, what is not yet known is what is done with each piece of location data transmitted out of a Windows Phone.