Yesterday a video was posted by Matt Cutts, the head of Google’s search spam, stating that geo-location or redirected users based on their location isn’t spam. Google feels that a site that utilizes geo-location techniques isn’t doing anything spammy.
Although, to be clear, what Google does consider spam is when your site redirects GoogleBot to a web page of content that users won’t be able to see. According to Google’s guidelines, doing this is considered spam, and is a form of clocking.
Here is a video from Matt talking about location spam: