A Google Groups thread has discussion around how this webmaster should handle redirecting its web visitor to a localized version of their site, based on the IP address information.
Since I recently wrote a comprehensive article at Search Engine Land on How Search Engine Redirect Users To Country-Specific Sites, I thought this post was particularly interesting.
Googler, JohnMu, was first to respond to the webmaster's question. He explained that as a user, he wants the option to either see a localized version or a different version. John said, "I live in the German-speaking part of Switzerland but often browse the web in English. If I go to a search engine and search with English queries for English pages, I do not want to be redirected to a translated version which the website thinks I would like to see." For John, he would think that you should "allow the user to switch [to any version] with a simple link."
On the SEO front, John explains that if you offer these localized version via a different URL (unlike how Microsoft's Live Search works, interesting), then the search engine will pick up the content and then aid the different regions to go to your localized version for you. Let me quote John:
This allows our crawlers to find those pages and - should the user accidentally search for and click on the wrong one - lets the user move to a different language version on demand as well. By allowing our crawlers to crawl the various versions, we'll be better suited to suggest those URLs to users from those regions as well.
Of course there are many advantages to using IP geo-location techniques for your web visitor. But you need to judge the pros and cons of your specific site's goals and decide what works best.
Forum discussion at Google Groups.