There was a story on this in AW&ST back in September. Here is an excerpt:

NASA Planning for Navigation on Moon, Mars
Aviation Week & Space Technology
09/25/2006, page 59

Frank Morring, Jr.
Washington

Spaceflight operations planners at NASA are studying new ways to navigate beyond low Earth orbit, where the Global Positioning System that serves well on the space shuttle and International Space Station (ISS) won't work.

The GPS constellation orbits at 20,200 km. (12,552 mi.), well above the shuttle and station. But when humans push past low Earth orbit (LEO) to the Moon and beyond, new methods will be needed.

"As we move toward the Moon, we can use GPS about two-thirds of the way," says John Rush, communications and navigation architecture and technology manager in the Space Operations Mission Directorate at NASA headquarters here. "Then we really need to switch to something else."

NASA has just completed a preliminary study of its overall space communications and navigation architecture out to 2030, when it is conceivable that today's renascent lunar-exploration program will have evolved into something that has put humans on the surface of Mars. Concepts range from setting up a lunar GPS network to drawing navigation cues from X-ray pulsars.

While spacecraft in LEO look in the same direction--up, basically--for GPS signals as users on the surface do, the angle will change as NASA's proposed Orion crew exploration vehicle heads for the Moon. The GPS birds broadcast downward toward Earth, so GPS receivers on an outbound Orion vehicle will soon find the business side of GPS spacecraft facing away from them. The problem starts at geostationary altitudes--roughly 35,786 km. (22,240 mi.).

"Even at GEO, what you're really looking for [are] GPS satellites that are just coming over the horizon of Earth, so that their Earth-facing antennas are broadcasting a signal that you can pick up kind of over the limb of the Earth," Rush says. "That really cuts down the number of GPS satellites that you can see."