There are a couple incentives to cheat at Foursquare. Maybe you sit at home all day, because your couch is comfortable and the fridge is right there, but you don't want people to know that you sat there and watched Ocean's 11 twice in two days. So you pick up your phone, "check in" at that hip bar in which Ocean's 11 is never playing, and now nobody thinks you're a recluse obsessed with heisting.
Or, even worse, you might be trying to wrangle coupons or other ill-gotten gains out of businesses by becoming the "mayor" of those locations. Why go to Cold Stone Creamery 18 times just to become mayor and get that sweet coupon when you could remain on that aforementioned couch and click "check in" on your phone 18 times?
Foursquare will stand for no more of this! Now, they've decided to impose a rule that should weed out most of the fraudulent check-ins: they'll attempt to match up your intended check-in point with your phone's GPS coordinates. If the two don't match, they won't penalize you--you simply won't receive any of those sweet rewards. Says Foursquare in their blog post :
Now, we’re never going to NOT let you check-in - you can checkin wherever you want, whenever you want - the idea is simply to not award points, mayorships, badges or venue specials if it looks like you didn’t really earn them.
There could definitely be issues with this system--GPS on phones isn't always all that reliable, and some legitimate check-ins could be screened. But it's a better solution than succumbing to cheating, especially as Foursquare grows.