We have a dedicated server located in NY with a 'US' IP, but our host is located in the UK and thus the netblock owner of our IP address range goes to an address inside the UK. I noticed with Google searching for a popular term showed us no where in the US results, but we are on the 3rd page already when searching 'pages only in the UK'. Will it be harder to rank better for 'regular' Google pages in the US since Google thinks we are in the UK even though we're not?
It will be harder, but not impossible. I would make sure you have a good amount of backlinks coming in from sites with U.S. IPs.
The location may not be the key factor, but it does play a role in your relevance to location. Whenever a user searches a keywork phrase that is not location specific, Google tries to give results more specific to that user's location. You can do a generic search and look at the "sponsoered results" which include a lot of results near you.