I just saw this excellent rant on what makes Silicon Valley special: its people.
I disagree with several of its other claims. First of all, that it's just a parking lot. That's true if you look at it from one angle. But, it has several Fry's. And TONS of infrastructure that makes it easy for geeks to get going.
Also, getting geeks to move away from concentrations of other geeks is INCREDIBLY hard. I'd love to move to Montana, for instance, but there's no way I would do that. I'd be bored there in a few weeks. The TechRanch there is fun, but sorry, when I'm down in Silicon Valley there are just so many people to talk to and so many interesting companies doing interesting things.
That said, there are several places in the world I keep hearing about: China and India. Look for the next Silicon Valley to appear there. Why? For exactly the reasons Paul gave: people.
I just added Paul to my reading list. Good stuff.