Fracturing a game based on location is not that difficult design wise. The main problem is cost effectiveness I hate pulling out business models and cost benefit analysis, but unfortunately centralized systems usually take either large centralized shared storage, RDBMS, schedulers, resource allocation management, etc; or the proper development of a distributed data server farm. This ends up costing a lot of money and a decent amount of development & operations manpower...in the MMO world your profits are not that high to begin with.
Even on some of the grids that I've built that have gone google-style (map-reduce, column based DB, true distributed file system, on cheap hardware) the costs quickly hit a few million per location. On our larger GPFS, oracle, vmware, on HP based clusters the software site licenses alone will eat most game companies.
Your best bet these days would be to try to develop something that uses Amazon's elastic compute cloud, apache's messaging system, run something like greenplum to distribute the DB load, and don't skimp on developers...cheap ones usually don't understand that in a distributed environment that every little chunk of code from the network/disk/etc up has to scale and be massively efficient cause you can't afford to 'just throw faster hardware at it'