In the year 2015, given the ubiquity of remote-access technologies, cloud-based development platforms, and online collaborative tools, one would think
that geographical location should be a non-issue. Although there seem to be synergistic benefits to a dev team being physically together (especially if the team members are extroverted and acquire stimulation from being around others), there are plenty of successful software projects being developed and marketed by remote teams.
Having said that, there are certain advantages to living in a tech hub like Silicon Valley - namely, networking and being a part of "the scene" - regularly running across other tech entrepreneurs at coffee shops, parties, etc. allows one to network, converse, and build relationships with others who can help you with your career (and you theirs).
So, it's not necessary to move to S.V. to succeed in app development - but it can definitely make things more convenient for you if you're good with people.