GeoChat will work with positions reported by the users using lat/long, common place names, or using custom place names or identifiers (Custom Locations) that your organization defines beforehand (like village pCodes or clinic nicknames).
To automatically detect the position of a user sending an SMS, InSTEDD or yourself would need an agreement with the phone companies in the country to access this information - which is really hard and time consuming, due to the lack of know-how about their own telco infrastructure in the least developed countries, or regulatory concerns around privacy in the most advanced.
It would also require some tech customization, but we would gladly do that work or help you with them, if we get past the non-tech barriers in any given country!
Maybe in 2010 some innovative wireless companies may start providing such support, if pressured by the market. In any case, just via SMS you don't get even full triangulation, so the location precision could be +/- 1 to 10 Km depending on terrain. The way this is done is the wireless providers track the active cell for a phone (corresponding to a tower). In some cases the telco infratructure has OTA (over the air) reporting of signal strengths of different towers, which can then be used for server-side triangulation.
Of course, sophisticated phones with GPSs or with triangulation software (like google gears) simplify the reporting of location by running software locally; but even if it is easy or invisible, it is still the phone actively telling GeoChat its location.