wildtrout,
Many phones have a GPS chip, even if they don't have the software. Yes, IF YOU HAVE CELL COVERAGE, the phone will tell authorities where you are.
GPS chips recieve info from satellites to determine your position, but don't transmit to them. Thus, to tell the authorities, the phone is still using the cell phone towers. They typically have a 911 setting, so that if you call 911 it automatically goes into that mode and the authorities get to track your phone. Even if you don't call 911, if they have your phone #, they can activate it and track you up.
The required coverage for the system is less than you need to make a call. So, for instance, if you have crappy coverage, not enough to make a call, this might still work. But if you have absolutely no coverage (phone says "no service"), the phone ain't gonna do nothing for ya. Unless they have a portable tower or something they can temporarily set up if they know the general area, which is possible.