potentialgeek - 3:42 am on Nov 9, 2010 (gmt 0)
I don't think Google factors the IP yet but they will in the future. The engineers will run out of algo tweaks.
Matt Cutts says he checked IPs when a site had extreme interlinking from other sites and he suspected there was a link farm. He actually did the IP check at a conference once if I recall correctly.
The only reason why the algo wouldn't consider IPs now is lack of storage space for that data. Google has been getting more storage so it's only a matter of time before IP address is part of the algo if it isn't already.