Matt cutts says in one of his videos on youtube that it affects how google determines your websites geo-targeting. This means that if your host is located in USA you will be targeting US visitors better. However, I can not say if this information is still accurate.
It should be fast and it should have very high uptime percentage. And yes, location may effect also but you can define your website's location and language in your page codes. Meanwhile, here you can find hosting reviews.
I agree with Wulkanen. The server location of your hosting could affect your ranking. If you want to rank globally, host your site in the US. If you want to target a specific country, then use a hosting company that has servers on that location.
yes, targeting would be the issue in hosting... it would have better ranking depending where your site is hosted.