Not very close location...
The method above, locates a phone to a LA (Location Area), which, depending on network configuration, may contain several hundreds of towers. (For a large metropolitan area, you may be able to find out roughly in which part of the town the phone is located)
Bigger LA conserves battery in the phones, since they don't have to update their location to the network all the time. But too big LA can lead to overloaded broadcast channels. The current trend of smartphones with active packet data sessions may force network operators to re-plan their networks and make their location areas smaller.
The protection mentioned in the article is that the network in many cases uses a temporary identity when paging a phone. This temporary identity is regularly updated (in ciphered mode) between the network and the phone, when they're communicating.
A much more detailed location is easily available to many applications in smartphones. They can simply read the current cell-id for which tower the phone is currently camping on. That way, you'll know the location down to a couple of hundreds of meters. (or a few kilometers in rural areas.)
Further, if an app is able to scan visible Wifi networks, then SSID and MAC of available access points may pinpoint your (even indoor) location to just a few meters. And such information was, for example, gathered by Google, when they were shooting street view.
