You might think you are out of luck when using Location services on your old iPhone, but you aren't! You have to perform an extra step, and you are relying on the original iPhone's tower triangulation method instead of GPS, but it's better than nothing. It, of course, requires the iPhone 2.0 software.
To use location services with your current local location, before you access any program that needs to know your location, go to the Maps program, and use the Find Location icon to get your current location by triangulation. Then, access the program that plans on using location services, and it will use your current location. (If you've used the "OK to use my location" button to access a program from one location, then move to another location and launch a location-aware program, your stored location will reflect your first position until you force it to update using this technique.)
I've had to do this manually every time I wanted to get local information, but it works well for apps like box office when you don't know the local zip code, or CareerBuilder when you just want a general location in order to display local jobs. Just remember to take the location for what it is.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20080714174536221