It was the military the initially developed GPS technology, so it makes sense that they have a lot of use for it.
The major use is for worldwide navigation, everything from aircraft carriers to humvees to fighterplanes. Logistics lays down the groundwork for effective warfare, and GPS plays a major role in moving troops around in a coordinated fashion either worldwide or within a city block. Similarly, missiles can more precisely hit their targets (and not the civilians next door) if they are guided by GPS systems. This may even be used to locate lost soldiers behind enemy lines or in the wilderness so they may be more quickly rescued. The military requires precision, and GPS provides it.
The US government also finds use for GPS devices, primarily for its tracking abilities and law enforcement, although these are somewhat controversial. Warrantless GPS tracking of cars is a favorite tactic for pinning down suspects and for keeping track of those out on bail. Tracking convicted criminals upon their release is another popular use, especially for paedophiles. Again, these are all quite controversial and, in the eyes of many, constitute a major violation of both commonsense privacy and of the Constitution. So, these may or may not be around a decade from now; follow the court cases.
Not all government uses are quite so insidious, however. For instance, GPS has proven to be a major aide to firefighters trying to figure out while on the front lines where the fire might spread next and where to try to prevent it.
