It was interesting to me that "Defining a Service Area for Your Place Page" aroused as much unease as it did among participants. I'm similarly concerned, thinking that it might perhaps "dilute" an already established location... or that there might be glitches in initial implementation... but I agree with Mike Belasco that he can't believe this is Google's intent. It would be very handy for some types of companies.
Further discussion in this thread....
Google Adds Service Area Listing Tool