They state in their FAQ that they use the GeoIP standard database. You can download that, and various APIs, from www.maxmind.com/app/standard for free.
I've tried it before and the 'pure php API' is quite simple to use. The one thing that Maxmind do note is that the standard database can't locate AOL users ( I believe all AOL traffic is routed via the US), so I's worth filtering out AOL users first and assuming they are from your prefered location.
Hope this is of some use.
BTW, watch out that you don't get caught out with a Google ban for sending uses to different pages to what the bot sees!
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