I've a good bit of local experience as do others that have commented above. My current opinion is that you have to do a lot of both basic local optimization (ie citations, create maps, etc) and a lot of basic web optimization.
Currently my observations lead me to believe that basic seo has greater weight than does basic Local optimization. (ie more weight on meta titles and links). But that could be deceiving. One source of very strong local signals is creating geo references such as maps. Its harder to discern what the competition is doing in that regard.
I've seen no evidence at all that having a 100% Google Places ranking does anything for local rankings. But 100% implies full information, lots of pictures, videos, etc. All of that is a positive thing.
Similarly a couple of years ago I partook in an in depth analysis of Local Rankings. Even then volumes of reviews on its own wasn't a strong indication of rank.
But great reviews are helpful for ultimately evaluating the business. (Plus they are meaty, informative and interesting to read :D)
In part I look at the Local/Maps index as a less developed less trustworthy, less spam filled index than the google.com index and ranking. I think Google realizes that. It could be one of the reasons they created the merged local/organic rankings.
As such I'd do a lot of work on both sides but put more continued effort into links to the relevant pages that will show in merged organic/local rankings.
At least that is the way I see it now....but its a moving target. All that could change, IMHO