Does server location matter in same country?

I don't agree with my friends Angio. The location of the server does have a meaning, I'm not not saying it's the only factor, but it makes no sense to have a server in the States, for example, when most of your customers are in Europe - cause even if the bandwidth is good and the server is fast (CPU) it will still be inferior - comparing to a server with less capabilities in Europe.

That's also why CDN solutions such as Amazon, Akamai are widely used.