I thought this stuff was already common knowledge. I read up on stuff like this all the time & test it myself and yes a lot of these apps can do a lot more than constantly ask for your location. In most cases the location data is "supposedly" used to show advertisements based on your area (which never really works). If you have an android phone you can download certain antivirus softwares that tell you what permissions apps get and some even let you block them. For example, "Cut The Rope" will drain your damn battery if you deny it the permission to obtain your phone's ID. The more you block it, the more it will request it. It burned ~100mb on my phone in 2days all by itself, just by requesting data. The worst part is I didn't even have the app running. At certain times of the day these apps will open on their own to request info from your device. Words with friends can send text messages on your behalf, read your messages, and edit your messages at any time without you knowing. Xiia Live Pro can monitor your phone calls. Alot of these apps have way more permissions than they really need. A simple alarm clock app on the market today needs your location, your phone ID, contacts, phone state...Some rules really need to be put down.
From what I also understand is that apple is also worse. I don't own an iphone but from the videos I've watched on this same topic, a lot more relevant data is easier accessible from the start than on android phones. I think the ios installed in general has as much info about your phone stored as possible. GPS locations were all secretly stored in iphones and could be easily ripped from a user's phone until Apple got harrassed about it. Even if you clicked do not use my location, the phone still tracked you secretly on the map app and cached every place you've been too in the prior 2 yrs.