Can't turn off 'Current Location' icon in Maps app

Question

Model: 4GB 1st Gen iPhone +(not experiencing any other issues except this)+
*Issue Began:* Shortly after update to 2.0.1
Frequency: Always
*Feature Concerned:*
In the Maps app, you can press the button on the lower left corner of the screen to make it show your current location. When you do, it asks the standard "Maps wants to use your current location" message to which you can allow or deny. If you allow, the button turns blue and a little blue circle with cross-hair pops up to show where you are. Pressing the button again will remove the location marker until you repeat the process.
Problem:
Within the first few uses of the Maps app after the 2.0.1 update, I had used the feature described above, however it won't turn off. If I push the button to turn it off, the button will turn grey as if it is off, but the marker does not go away. Every time I open the map, it searches for and then shows my location without me turning it on and without asking first. This slows the performance of the map until it is done finding me which can take from 3-15 seconds.
*I've Tried:*
1. Turn feature on and off again= button goes from grey to blue but location always shown and no dialog.
2. Returning to Home screen then back to Map= button still off and still finds location, no dialog.
3. Force-Quitting then re-launch Maps= same result as above.
4. Cycle Airplane mode= same result as above.
5. Cycle Power= same result as above.
6. Restore iPhone using backup= behavior returns to normal, but first time feature is used again the problem is re-established.
7. All combinations of above= same.
*Ideal Solution:*
Fix the problem without having to delete applications or restore to factory default (ie. loose all my application data). I guess I'm hoping someone else had and fixed this issue, 'cause I'm not leaving much room for troubleshooting am I... :-p

Answer 1

*"I've Tried" Additions:*
8. Turn off "Location Services" (Settings->General)= when LS is off, Maps does not automatically show my location, but if I push the button it gives me the dialog and the problem is re-established (doing so will also cause LS to turn back on).
9a. Turn Location Services off
9b. Launch Maps to verify marker is now gone button is grey
9c. Turn Location Services back on
9abc= upon returning to Maps, the button is still off but it once again immediately searches for my location with no dialog.