This article, reposted with permission from rec.radio.scanner, sheds a bit of light on the topic. In article <2u47fl$18no@hermes.acs.ryerson.ca>, cal@ee.ryerson.ca (Calvin Henry-Cotnam) writes:

I just heard an interview on the radio with a representitive from the "umbrella group" that represents the cellular industry. He explained how position tracking is done, and stated that call content is not involved. A court order is needed to track position, but another court order, presumably one more difficult to get, is needed to intercept the conversation. The location tracking basically locates which cell site the call is being picked up by plus monitoring of actual signal strength which usually can get to within a mile of the location.

The original poster mentioned that he's not an expert on cellular; the person he cited is from an ``''umbrella organization'' for the cellular industry in D.C.