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The bloggers are complaining that searches for non-geographic specific phrases are now including local search results dependent on Google's best guess of your location. The way they do this is by using the location of your ISP, with the result that people using a national ISP might appear to be in a different place than they actually are.
Hence the result in the Blogstorm article that a search for "golf courses" based in Leeds was given details of courses in London.
The truth is Google is on a hiding to nothing with this - while it does have real value for users, it is very difficult to get it right for users connected to the broadband network.
A thing many people are missing is that this service really comes into its own in the mobile environment. I'm lucky enough to have one of the Google integrated G1 phones and on that it's fantastic, as Google can work out exactly where you are either by GPS or mobile basestation.
Google has decided it wants to capture the mobile web market and is taking aggresive steps to achieve this. The legacy issue is a thorny one for Google - I suppose they have to decide whether carrying on as they are with little gripes is worthwhile or whether they should do something different.
One solution might be to link local search to wherever your Google account is based - if you have one. This might then encourage even more people to sign up to Google - pushing forward their attempts at worldwide domination.