How Does Your Web Server's Location Affect SEO?
A website' domain name suffix (.com, .co.uk, etc), is used to decipher which geographical version of Google the search results should appear in. For those sites which use a .com, .org, .net domain that is not country specific, the web server's location is used to determine the location of the website.
A web server which is located in the United States that is hosting a website focused on UK visitors is going to take much longer to load for those visitors than if it were hosted in the UK. Google Caffeine is now taking loading speed into consideration when displaying search results, making location an important aspect of SEO.