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For example, a page is SEO'd for "party decorations boston", and someone in boston searches for "party decorations", will the page be weighted in?

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Yes, surely. In the latest Google Panda and Penguin Updates Google gives preferences to local search result.i.e The results that are available in websites which are made keeping in mind a specific location, in your case it is Boston.

So if some one is searching for party decoration in Boston and since your webpage is SEOed for party Party decoration in Boston, then your webpage will be given preferences.

I would also suggest to register your business in Google map, this will give an extra edge.

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Can you provide some sources or references for where this information is from? –  Glycan Jan 8 '13 at 15:43
    
This will help savvypanda.com/blog/factors-of-local-seo.html –  Sidh Jan 10 '13 at 9:57

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