Keamy was definitely threatening Gault with the device. Like 'ha ha you can't shoot me, look what I have' I think it is a weapon of some kind not a tracking device or communication device. My first thought about Frank dropping the gps/sat phone was that he wanted the Losties to use it to hide from Keamy and co. Not to use it to follow them, use it to evade them. But maybe not, maybe he does want them to find them. Sawyer knows that those guys are bad news so maybe Jack and him can round up a posse and go ambush Keamy's team.