OK, Stu... I think I see the kind of effect you're talking about, but I'm not seeing it on yp.com.
The localized content I see on the home page of yp.com is in an iframe, and the Google cache on my system, anyway, does show a blank area where that content is. I need to reset that manually to get my location. That said, they do have me at least in California, so there may be something else going on.
This differs from another iframed localized display I have handy. A client who serves up localized weather on some of his pages also uses an iframe for that display... and while the Google cache appears to show me my local weather, as if Google had cached it that way, it is in fact showing a live data feed from the weather info supplier, which is detecting my location via IP, and displaying it in the iframe and within the cache.
Within the cache, the page continues to display as Mountainview, but if I click on the cache link to the actual page or on the serps link to the page, the live page localizes instantly to where I am.
I can also further reset the location by clicking "change location" again and entering a new location, different from what's IP-detected. If I do that, the new location is remembered by a cookie, and it apparently overrides the IP detection. I can open and close the page, and whatever location I've set manually is remembered and returned.
However, if I bring up the Google cache again, with my cookies unflushed, as before, the cached page continues to show Mountainview in the cache. But, if I call up the live page, either from the cache or from the serps, the location displayed is no longer my actual location... it's the preferred location I've set and is remembered by my cookies.
So, there's a complex set of individual behaviors, depending on how a particular page is set up and when and how the localization displays are triggered.
Anyone else is welcome to jump in... please. ;)