I'm in the same boat as the original poster, but i've tried all the solutions including the one in the last post and it doesn't work.
I'm in Perth (Aust) but my widget keeps showing Sydney. I've turned on GPS, have location services (WIFI) on and have looked at all the options available within the menu of the widget but none allow me to set my home or current location.
SHort of deleting all the other cities i'm stuck for a solution to getting the home screen to display Perth not Sydney. Given i'm rarely away from my home city this is annoying.