The quick summary is that it's not ready yet, but it's looking very exciting! To get an update on the status of geospacial modules the following wiki is key.  Unfortunately, of the 20 or so geo modules, only 6 have a Drupal 7 release at this point (only two of which are alpha releases & the rest are development releases).  

• GMap includes location, taxonomy & macro utilities and of the 27,000 sites using this module there are 1000 that are presently using the Drupal 7 development release;
• GeoNames ties to the GeoNames web service;
• Geofield stores points, lines & polygons and includes a HTML5 geolocation widget;
• Geolocation Field stores Longitude/Latitude pairs and is developing a HTML5 geolocation widget;
• OpenLayers works with the OpenLayers JS and there are a number of related modules which have yet to be upgraded to Drupal 7;
• Location collects addresses, geocodes them and then associates these points with nodes & users;

There is also a version of the Geo module for Drupal 7 on GitHub. This is fairly normal for large re-writes, but it hasn't been modified since February.  Hopefully there is another fork out there that is more active.  Microsoft is also developing a Drupal 7 module for their Bing Maps which could be quite interesting.  Although not done the standard way, there is a GitHub project for the Bing Maps module. The birds eye view from Bing maps is really very detailed!

As there is clearly growing support for HTML5 in the Drupal community, I'm sure that we'll see more Drupal 7 modules that are presently using this well supported HTML5 feature.  With the rapid expansion of moble browsing, accurate location aware browsing is going to be increasingly important.  For more information on HTML5 geolocation support.

The Location & Mapping Group and Geo June also are a great place to learn more about Drupal's geolocation tools.

Hopefully the HTML5 user geolocation module gets upgraded soon as this is a nice feature for social networking sites and it is used in Drupal.org.

Finally, since Drupal 7 was written to xHTML 1.0 Strict, I thought I'd point the direction for more information on HTML5 support. The best resource is the HTML5 Group which has an active community.  There are also some great starter themes like Genesis & AdaptiveTheme which when used in conjunction with HTML5 Tools will help you take advantage of some of the new features that are coming with this new standard.