We always hear how important it is to be in the Valley, but of course that advice always comes from people actively building companies in the Valley. And we hear from a few out-spoken companies how unimportant it is to be in the Valley, but of course they're actively building a business elsewhere.
I think Naval Ravikant makes a good point (http://startupboy.com/2010/01/17/why-you-need-to-be-in-silicon-valley/). For winner-take-all situations like Facebook or Twitter, you need every advantage you can get, and it makes sense to move to the Valley. But what about the other 99% of startups? (And development shops, and freelancers, and un-funded side projects, and the rest...)
I know plenty of companies move to the Valley after a certain point. And, although much rarer, some companies leave the Valley after starting there (for example, Wufoo).
So what do you think? To those people who have experienced both locations (SF and something else), what differences have you found?
How important is location, really? And why?