I use location services on an iPod touch almost daily and without a network connection. The location cache is currently limited by size. It seems to hold about a small city's worth of wifi hotspot coordinates, which is downloaded in large blocks at a time. Reducing the size of the wifi location cache to a mere 7 days could severely reduce the usefulness of that feature. I really hope they're not killing a great featu…
If it's going to harm use, I don't doubt Apple would turn that 7 into a 14 or a 30 without batting an eye.