To me it isn't only about geographic location, but about network/backbone path.

Example: I've run into a lot of issues with Comcast customers experiencing connectivity issues with the main Texas server.

When I move these customers to the Michigan server, the issues go away, even though MI has more hops and a bit more latency. I even have some Comcast customers in Texas that have better results connecting to Michigan.

This could be due to its different geographic location resulting in a different path through the internet. Or it could be simply because MI has different backbone providers than the TX data center. I don't know enough about either data center to be sure. But the results suggest there's something very different between the two.

Here's a really interesting article written by an admin at Level 3 that relates to this topic... Observations of an Internet Middleman

So to me, it seems that thoughtful selection of alternate data centers that use different backbone providers might help as much, if not more, than just different geographic locations on the same backbone.