iOS 4.3.3 isn’t going to give your iPhone any new features. It won’t give you any bragging rights the next time you’re comparing your smartphone to your friend’s Android or BlackBerry handset. But it might just give you some extra peace of mind, and keep Apple out of the courtrooms.

That’s because this update to Apple’s mobile operating system addresses a “bug” with how these devices (including the iPhone 3GS, 4, iPod Touch 3, 4 and iPad 1/2) collect and store information about their locations.

If you’ve been living under a rock, here’s what happened:

A few weeks ago, two researchers announced that Apple’s iOS devices were storing relatively large amounts of location information; that this information was being stored in an unencrypted fashion; and that this data was being copied to people’s computers every time they synced their device via iTunes. Most worrisome was that if you knew what you were doing, you could use this data to create a very accurate map of where the device’s owner had been over a period of time, which was up to 10 months in some cases.

Needless to say Apple was put in the hot seat over this and subsequently apologized for a bug in their software and promised to make the necessary changes.

Today they make good on that promise.

But is it a good thing?

Apple says in their description of the update, that it “reduces the size of the “crowd-sourced” location cache, no longer backs up the cache to iTunes, and deletes the cache entirely when a user turns Location Services off.” What this means, is that if you opt-out of all location-based services on your device, it will no longer keep a record of where you’ve been.

Here, for the record is the portion of the full Terms of Use that relates to location tracking:

Location Data. Apple and its partners and licensees may provide certain services through your iPhone that rely upon location information. To provide and improve these services, where available, Apple and its partners and licensees may transmit, collect, maintain, process and use your location data, including the real-time geographic location of your iPhone, and location search queries. The location data and queries collected by Apple are collected in a form that does not personally identify you and may be used by Apple and its partners and licensees to provide and improve location-based products and services. By using any location-based services on your iPhone, you agree and consent to Apple’s and its partners’ and licensees’ transmission, collection, maintenance, processing and use of your location data and queries to provide and improve such products and services. You may withdraw this consent at any time by going to the Location Services setting on your iPhone and either turning off the global Location Services setting or turning off the individual location settings of each location-aware application on your iPhone. Not using these location features will not impact the non location-based functionality of your iPhone. When using third party applications or services on the iPhone that use or provide location data, you are subject to and should review such third party’s terms and privacy policy on use of location data by such third party applications or services.

Take careful note of this statement: “By using any location-based services on your iPhone, you agree and consent to Apple’s and its partners’ and licensees’ transmission, collection, maintenance, processing and use of your location data and queries to provide and improve such products and services.”

This means that you agree to the collection and transmission of your location data even if you only use one location service-based app. The Maps app for instance, that comes standard with every i-device. I don’t know about you, but even if I turned off location services for every one of the apps I’ve installed since getting my iPhone, I’d still want Maps to show me where I am :-)

I hope that this update doesn’t in any way reduce the speed or the accuracy of the location-based services on the iPhone or other i-devices. I wasn’t upset about the data being kept on my phone and would happily allow it in return for a great user experience.

To update your i-Device with the latest OS, simply launch iTunes, plug in your gadget and follow the prompts.