Locate button in Maps

I am having problems with my iPhone 3G knowing where I am. In playing around with the Maps app, I press the Locate button in the lower left. When I first open the program it is a greyish blue color. I press it to locate where I am and it turns blue. It shows that I am about 15 miles from where I actually am. I can press it again and it turns greyish blue again or I can press it once more and it turns blue again. What are these different colors for?
The goofy thing is that my wife's identical phone most often is right on. My varies from 15 miles northeast of where I really am to 10 miles south of where I really am. I think that sometimes it tries to use my router location and sometimes my cell tower location, but never GPS.

When the Location button is blue Maps is tracking your location. When it isn't blue it isn't tracking your location.
The Maps application uses 3 methods to locate you; known WiFi hotspots, cell towers, and GPS. GPS will only work outdoors with good visibility of the sky in all directions. WiFi and cell tower triangulation provide location when GPS isn't available, and also get an approximate location that GPS refines oce it gets a lock on 4 satellites.
If you have GPS reception your location should always be correct to within 10 meters. When you have a GPS lock the location pin will pulse. If you don't, but you have nearby WiFi hotspots, it will use those. But if a known WiFi hotspot has been moved recently that can be very inaccurate. Cell Tower triangulation is also approximate, but should locate you reasonable well.

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