The problem with the new sorting is that it easily shows who's in the same city, but doesn't show who's in the same state. Yonkers, NY is not far from NYC, but is very far alphabetically.
I just realised that my previous post may have been a bit ambiguous. Just for completeness, what I meant was that the spreadsheet was previously unsorted (people would add their details at the bottom) and that someone came along and sorted it by location (presumably to make it easier for people to find each other). However, the sorting doesn't really solve the problem, as you correctly describe.
I made a new column and started adding details in reverse (e.g USA, NY). Admittedly I got a little bored so I didn't do everyone. Re-sorting on that column (if it's ever completed) would solve your problem.