Originally Posted by kaijuinc
As everybody else has stated, put your servers where your customers are!
But a few additional things to consider:
Locate your server in a country where it is legal to operate your services and ensure that it also meets your privacy requirements. If you accept payments through your website, it might complicate things with tax laws, data privacy laws, and a few other things. For a smaller site, you *probably* won't get into any sort of trouble, but if a breach happens, you could be in a bad situation.
If you plan to operate voice services (VoIP), video streaming (RTMP or something else), Game Servers, etc., anything that requires low latency, there is a market in Chicago for Game Servers and VoIP providers.
Is your site obligated to comply with the DMCA? It might be, if you locate it in the US, even if your business is located in a country that does not have to comply.
+1 rec. exception: If you want to provide services like VOIP, it doesnt matter if your D.C is in Chicago and your customer base is on the opposite end of the globe/country. What matters the most here is latency. So, it's best to stick to a dataceneter in a city where your target audience is and simply keep getting more colo space as you grow in different cities.