The only problem with segregating the classifieds, is the casual browser may not go to look. I recently picked up a board travel bag that was posted in the mid-lantic forum, mainly because it was a good deal and the seller was nearby, so I pulled the trigger. I would not have been looking in a classified section.
I like the idea of having it both ways. Not sure if it is possible to do this, but here's my vision of how I would like it.
Each geographical forum would have a twin classified only section.
Then, if possible an overall for each region where you could see both
Mid-lantic (talk and classified)
Then at the top level
Forum Talk (posts from all of the regional talk forums)
Forum Classified (posts from all of the regional classified forums)