Server placement does indeed have an impact on lag, regardless of size, and this -can- pose issues though they are not likely due to peak time differences. I think the best solution, and one I've promoted before, is to leave the current servers international but to try adding or moving a server to test regional server waters. I would like to see a NA server, and this preference isn't due to me wanting to segregate myself from the rest of the world population, but moreso to ensure the groups of people I play with.

Culturally it is much easier, and more benficial for myself to play with people in North America. I'm not overtly educated in other languages (I can speak basic french/spanish) so international servers can be a problem for me depending. I have sporadic work schedules, and don't always have the chance to play in the same timeframe. And personally, if I had the option to play either on a high pop international with lots of people not speaking my first language, or a low pop regional where everyone speaks my language, I would take the low pop as I would easily be able to get the most out of my playtime without having a language barrier.

And for those that refer to the auto-translate, although it does serve basic functions, you can't have -real- interaction with it. Your options are basically like automated responses and don't serve much purpose of actually developing friendships.