According to a story published in the New York Times, Apple was forced to eliminate the GPS features of the iPhone 3G in order to sell it in Egypt. You can see that GPS is not mentioned on the Egyptian iPhone web page; the site mentions Wi-Fi, 3G, internet, MS Exchange and even maps sans, unfortunately, GPS.
The reasons behind this: the Egyptian government's belief that the GPS features could be a military security risk and therefore should be limited only to the military in that country. However, an even more significant aspect of the exclusion involves the effect on pro-democracy movements. Coupled with the fact that this is not the first time that the Egyptian government has clashed with technology and probably will not be the last. The Times article goes into details of another example regarding Facebook.
The Chinese government could also hypothetically ask Apple to remove a number of features such as GPS, Wi-Fi or 3G. Limitations might also be extended to Mobile Safari. This could explain the delays in opening new markets in some foreign countries.