Your cell phone is spying on you, but don't be afraid. Thanks to better mapping technology and hyperlocal services tailored to the small screen, the latest wireless gadgets can automatically pinpoint your location and then direct you to everything from the nearest Chinese restaurant to where your friends are hanging out. And while it may seem creepy to have your phone keeping tabs on you even when you're sleeping, this isn't some Homeland Security nightmare. It's just an easier way to find people and places nearby.

Mobile social networking is hot. The new Drift phone from Helio comes with a feature called Buddy Beacon that lets you see your location on a map that pops up onscreen, thanks to the global positioning system (GPS) chip built into the phone. You can also see where any of your friends are--assuming that they authorize it and own the same $225 phone. Targeted at teens and twentysomethings, the idea is that if you always knew your friends' whereabouts, it would be that much easier to meet up with them. "We create a natural extension of what people already want to do, which is, they want to be with their friends," says Sky Dayton, a co-founder of the Internet service provider Earthlink. Dayton launched Helio last summer with $440 million in funding from Earthlink and South Korea's SK Telecom.

Helio already has buzz--and lots of imitators. The start-up's 70,000 customers each spend about $100 a month--about twice the industry average--for an all-inclusive calling plan with text, photos and video messaging. A similar service called Loopt, which is free and works only on Sprint's Boost Mobile youth brand, claims 100,000 users. And anyone with a Windows Mobile device, like the Samsung BlackJack and Palm Treo, and $30 can download software from gpsgate.com that works in much the same way.

If cyberstalking your friends isn't your bag, you can still use your phone's GPS genius to find businesses or get driving directions on the fly. Sure, this option was already available on some phones without GPS, but it worked so poorly that hardly anyone ever used it. Now the $200 Verizon enV, a smartphone released in January, shows your position on a map and suggests everything from dry cleaners to plumbers nearby. Other cool offerings include the Dash Express, a $700 portable car navigation system on sale this spring with Yahoo!'s Go! local search on it, and the iRiver W10 from ReignCom, which combines an Internet phone, MP3 player and personal navigator in an iPhone-size unit.

Nifty. But is there really a market for these GPS gizmos? After all, not everyone is willing to pay $100 a month to hound her friends. Free services, on the other hand, make money on advertising. But there's not much room for ads on a screen about as big as a Post-it. The mobile-phone ad market brought in just $200 million in 2006, according to the Yankee Group, vs. $16 billion for online ads. Nonetheless, ABI Research expects revenues for location-based services in North America to spiral from less than $1 billion last year to more than $13 billion by 2011, partly because of the cheap GPS chips and free Google maps that power some devices.

Stephen Lee, 23, is already sold. He says his Helio's Buddy Beacon came in handy one night when his roommate went out. "I saw that she was at Wendy's, and I just texted her to pick up a couple of 99¢ crispy-chicken sandwiches," says the graduate student in Chattanooga, Tenn. "I really use it to show other people that it's cool and they should get one." So far he has convinced his roommate, his girlfriend and his best friend. Well, it's a start.