Colintho, In the Google Forum, there have been many discussions about UK hosting. It is a known fact that if your site's IP address is in the UK then your site will be included in the Google.co.uk index. So there is one advantage.
The second advantage/disadvanages will be a 250 Millisecond lag beteen Europe and the US. So if you need that 1/4 second of extra speed host closer to your targeted market.
The third is price of Hosting and bandwidth. I don't have much experence with hosting costs (I own my own servers) but you should look into this. The smaller the market the more limited it will be and it could be more expensive. I am aware that bandwidth costs more in England. Even in the US, bandwidth rates vary based on how much you use. So if you use lots of bandwidth you will pay less and less per GB the more you use. (however most websites don't use GBs, most are in the MB range)