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paybacksa - 3:58 am on Aug 23, 2005 (gmt 0)
Note that historic ZIP codes often do not correspond to popular modern vernacular... sometimes you find the first official post office (zip) is in the oldest, most-off-beat downtown area far away from the commerce and communities (yet still at the top of the local results). These are still not the same serps produced when one does an "X in Denver" (no quotes) search. Those are "relevance" ordered as expected (Yahoo! still puts the local results at the top like an ad, with a click thru to the local serps).
I didn't dig past a handful or markets I am active in, but I do notice that *given no other apparent preference* the local SERPs are in zip-code order, centered about some defined ground-zero for a given city. For example, looking at Denver we see seaches for X in Denver yielding listings from 80202, with mileage reported outward from there. Ditto for several other cities. GZ may be 80200 but I didn't go any further.