As Greg Sterling points out, in this case Google is playing catch-up with sites like Ask.com (which launched this in December with its AskCity local search tool, as well as Trulia and Yelp. Yahoo has defined neighborhoods in large cities for some time as well.
The Original Search Marketing Event is Back!
SES Denver (Oct 16) offers an intense day of learning all the critical aspects of search engine optimization (SEO) and paid search advertising (PPC). The mission of SES remains the same as it did from the start - to help you master being found on search engines. Early Bird rates extended through Sept 19. Register today!