The Pdroid http://www.xda-developers.com/android/pdroid-the-better-privacy-protection/ patches are a "better" approach. They allow apps to keep the permissions they are designed to use, but feeds them fake data when they use them.
This protects privacy without crashing apps. However, it requires either a custom firmware with it already baked in, or running the patches against official firmware+root. This places it out of the comfort zone of many.