NEPRO Japan, following their previous study published in January 2004, have again published the results of a study into people's useage of their mobile phones' GPS function. [via]

What must be said on the number of mobile phones equipped with GPS: as of summer 2006: 90%+ of AU models since 2004, 3-4 models for DoCoMo and Vodafone (rebranded Softbank as of 1st of Oct.) so it's unlikely that more than 50% have a GPS chip in their phone, but DoCoMo and Vodafone do still provide local information using cell-tower signal (400m accuracy at best I think) to roughly identify where you are in Japan and what shops, restaurants, convenience stores, banks, ramen shops etc... are around you.

It seems that compared to January 2004, 2.5x more want a GPS in their phone and that twice as many use theirs.

About the precision of such phones: indeed, simple GPS systems will not work well in the shadows of tall buildings, but the systems available in Japanese mobile phones are of course ready for urban action. The precision is surprising, 5m (the maximum commercially available, I think) even in dense areas, because not only is the phone capable of reading GPS satellites broadcasts on its own, but it is also refining its coordinates helped by the position of the nearby cell towers (using triangulation).
I recommend you to read more on that GPSone chip inside those AU phones.

Reusing the results translated by What Japan Thinks:

Of the 3608 people interviewed.
Female: 58% (previsouly 61%)
Men: 42% (39%)

Age class.
under 10: 2% (9%)
20's: 35% (45%)
30's: 44% (35%)
40's or above: 19% (10%)

Q1: Do you use your mobile phone's GPS functionality?
Yes: 26% (against 13% answering Frequently, Occasionally and Almost Never in Jan 2004)
No, but it has the capability: 25%
No, and it doesn't have the capability: 49% (82%)

Answer #2 seems too high indeed if added to answer #1 and may be due to people confusing GPS functions with the local area info offered by all carriers using cell-tower signals to locate your phone.

Q2: Do you think it's useful that mobile phones have GPS functionality?
Yes, really or a little useful: 75%!! (29%)
No, not really needed or not needed at all: 17% (17%)
Don’t know: 8% (28%)

The following questions are different from 2 years ago. But comparison is still possible.
Q3: For what purposes would you like to use a mobile phone with GPS functionality? (multiple answer)
Navigating towards my goal: 69%
Navigating towards a travel destination: 59%
Locating safety zones or evacuation zones during disasters: 48%
Searching for information on nearby public facilities: 39% like love hotels?
Checking the location or safety of children or old people: 39%
Replace car navigation system: 36% like this?
Searching for nearly car parking: 24%
Work-related navigation functionality: 9%
Other: 7%

Q5: What would you worry about when using mobile phone GPS functionality? (multiple answer)
Battery life: 69% yeah... a bummer...
Transmission or usage fees: 69% On AU phones with flat-rate data fee, no problems. Usage is about 90yen or day or 315/month
Infringements of privacy: 60% Be scared!
Accuracy of positional information: 43% Be scared!
Coverage area: 35% Unfortunately, yes, if the phone is off the network, then, no GPS...
Seems difficult to use: 15% Is pretty easy though!
Other: 5%