Yes. Cell (mobile) phones can be traced. There are actually five different methods available. Handset, provider, SIM, WiFi & satellite based tracking. Each has their own merits and also drawbacks. For example, if someone was using SIM based tracking, you could get rid of the SIM. Handset-based tracking would usually require that software be uploaded onto the phone for it to work (see 'find my iphone' and such for examples of this), WiFi and satellite would work in similar ways; if you think about current smartphones, most of them have a location setting, if google maps is installed for example, and your location settings for that are activated, then you are effectively beaming your location to satellites, which would obviously make you very easy to track! But I wouldn't worry about all the 'government spying' conspiracy theories, unless you're breaking the law that is. Even then it would have to be pretty serious for them to invest the time and money into tracking you.
