In this paper we investigate the impact of user proximity to handheld antenna on the performance of RSS-based indoor positioning. A planar inverted-F antenna (PIFA) is designed for operation in 2.4 GHz and the changes in antenna characteristics due to proximity to human head are quantified using a commercial full-wave simulation software. Large variation in the radiation pattern of the PIFA, hence the measured RSS, is observed. These user-induced RSS variations are then mapped into positioning errors for several practical scenarios of resembling indoor wireless channels.