The iPhone 4 includes a new technology package that allows the phone to know where it is without constantly firing up the GPS. This active geo-fence is what makes location based reminders work without draining the battery. It's only on the 4 and 4S, which is what those phones support location based reminders and the other devices currently do not.
With the assisted GPS tech on the 3GS and iPad, using both cellular pings and wifi addresses, this is also possible, however in the iOS 5 beta it was not accurate enough in use.
I suspect they are still working on a software fix, but as usual Apple has not made any public feature statements.