The only time that Photosynth makes use of GPS coordinates in photos' metadata is after all the photo positions have been calculated, relative to each other. The GPS coordinates of all of the photos is then averaged and an automatic geotag is added to the synth.
As you may have figured out based on what I just said, though, Photosynth does not make use of GPS coordinates to figure out where the individual photos are on the map or in relation to each other. The reason for this is that GPS coordinates are often inaccurate. The average distance that latitude-longitude tags are inaccurate by is 40 metres.
Photosynth's image positioning is purely grounded in computer vision techniques like image feature matching.