If your going to implement this you have to resolve some practical implementation issues. Sorry, long debunking coming, but many points to cover.
First You have to get the data to the vehicle that tells it what speed it supposed to follow.
There exists several possible options on how to do this. You could try and send the data to the cars by satellite and a central speed-by-road database. Problem with this is that there is only so much bandwidth available. A well written explanation of this was posted to slashdot.
You could also send out the data by using radio signals. Like all radio signals, they are susceptible to weather, environmental concerns, jamming (intentional to be expected) and getting their signal to only the intended audience.
You could try and download the data ahead of time to the cars computer. This is far too much to download through wireless transmission mediums, you would have to do it by removable disk. Assuming in 5 years or so that we probably would have a version of the CD that will hold that much data, you still have problems with integrity as people modify the disks they insert.
Conflicting signals. Lets say your on a freeway with a service road right next to it. All of a sudden your car starts to break from 60 MPH to 25 MPH. Who is responsible when the inevitable accidents happen? The most likely thing to do is use radio signals transmitted from speed limit signs. Radio signals can be directional to only a limited extent. It would be to easy to pick up the wrong signal under the wrong circumstances. As a hardware hack, you could also make something to generate a signal with your own desired limit.
GPS accuracy. Non military GPS is not accurate to pinpoint what road your on if your close to another road (freeway next to a service road for example). While this could be easily resolved, the military would never allow for GPS to get this accurate for the masses.
Second Liability issues, who is going to be responsible for inevitable fatalities that this will cause.
This would be an issue in bad winter weather. I live in Minnesota, the practical reality is that the roads take a much higher level of skill, and different driving methods for winter than they in summer. We commonly get the following road conditions in the winter; ice, black ice (frozen car exhaust), sleet, snow, and or any combination of the above. A system like this would have to slow speed by breaking, simply cutting off fuel would not slow down a car quickly enough in circumstances like getting off the freeway. This would be very bad to do in the wrong weather. One of the most common ways for someone who is not experienced in such weather to get into an accident is to hit the brakes. Having your car do this when your not excepting it could easily be fatal in winter weather conditions.
System gets cracked. This thing gets put into implemtation and MS drops down to the #2 target for hackers overnight. Hacktivism would gain popular support by the masses. Someone would hack it and drop the speed to 5 MPH during rush hour. Inevitibly this would probably cause a fatality or six. Or someone could set your speed to 0, and nobody goes anywhere until it gets fixed.
Driver complacency. This system creates one more opportunity to take responsibility away from the individual. Drivers who grew up needing to be responsible for their own speed would be better off, but would inevitably become complacent about that, and other issues. Those drivers that learn under such a system would have skills issues when the system fails.
Manufacture responsibility. Who is responsible for when bad things happen. The people that make the hardware that interfaces with the GPS, the GPS manufactures, the cities, the map companies. It would be a bloody nightmare that would make many lawyers very rich.
Civil rights. With such a system, it is quite conceivable that they would make the GPS tracking system two way capable.
Excuse. "We can instantly end bandits running from the police by shutting off their gas supply and bringing them under a controlled stop". Sounds wonderful for public safety and I can garauntee that it would get publicized. This capability could easily be exploited by criminals as well as police. Road side robbery would become more popular
Tracking. Britian passed RIP, and is already is in love with CCTV in public, they use this with face tracking software to track "bad people" walking around in public. Why not track "bad people" when they are driving? Who gets to define the bad people? Do you really trust your police not to exploit such a system?
Tracking part II. Many states driving departments, including my own, have for years sold to marketers your address and other such information. Marketers routinely invade your privacy on the web, and who you call gets sold by your phone company. Why should such a system be any different?
Law enforcement abuse. Here in the US, law enforcement has repeatedly shown it's ability to abuse any technological advantage it can get. For example, a wiretap allows the recording of your phone conversations. However, it can still pick up conversations in your house, when your phone isn't in use, through the phones microphones. These conversations can't be used as evidence, but they are used.
Automated tickets. They already do this with speeding tickets, and could easily extend this to such a system. Even in areas without speed control they could still speed monitor. Your tickets for every time you speed in day, would arrive by mail. Your insurance company would probably find out about them before you and would raise or cancel your rates accordingly. With software to track such things, you could easily accrue enough speeding tickets in a short drive to raise your rates, cancel your insurance, and then have your vehicle's speed set to "0" until a tow truck arrives as it is now uninsured.
The moon is covered with the results of astronomical odds.