A lot of great comments here. I just wanted to add that even just your ip address is enough to roughly track your location. When your phone checks gmail you are leaving digital breadcrumbs in Google’s logs of your ip address which roughly tracks your location. App permissions will not solve this. We need strong privacy regulations with teeth.
Yup, but that would require more effort (I.e. interacting w/ network operator). Tracking someone by Bluetooth can be done passively, as evidenced by services like "Find my Droid" or "Find my iPhone" or whatever.
Blocking my cell radios eliminates the entire point of the phone for me, so the tradeoff is too steep. That said, airplane mode is right over there if you need it temporarily.
There are still attacks that can get around the VPN. It certainly helps, but it's not a complete solution on its own like VPN providers would like you to believe.