Official Google Webmaster Central Blog: Server location, cross-linking, and Web 2.0 technology thoughts

"In our understanding of web content, Google considers both the IP address and the top-level domain (e.g. .com, .co.uk). Because we attempt to serve geographically relevant content, we factor domains that have a regional significance. For example, '.co.uk ' domains are likely very relevant for user queries originating from the UK. In the absence of a significant top-level domain, we often use the web server's IP address as an added hint in our understanding of content."
Official Google Webmaster Central Blog: Server location, cross-linking, and Web 2.0 technology thoughts: