If I asked most careful people if Instapaper could have their location, they’d refuse, because there’s no obvious good reason. But if the app asks right when they enable a location-based setting from a screen that shows why it’s asking for their location, they can make a more educated decision. Similarly, if an app doesn’t seem to have a good reason when it asks for Contacts, a skeptical person can decline.
I would love to see more developers put thought into when a user sees a dialog so that users can make more educated choices. I am not holding my breath though. ((There are hundreds of great developers, but thousands of developers that are less than great.))