But is no different than just send them a link where you save their IP when they open it (and with little social engineering you can trick anyone into clicking a link)
Actually, it's very different because one can passively acquire contact info this way, as opposed to actively contacting each one. Not only is it faster than social-engineering each contact, it's more palatable to those who don't want to attempt such.
Sometimes you can get to the correct city in the US. Rarely can you get any further than that from an IP. In other countries you can only really be sure about the country.