How does Piwik determine what flag to display? Last night I tested out my new installation from my desktop - got as expected the Norwegian flag and Firefox 4. From my HTC Desire, my Firefox returned Firefox 4 in the Piwik log and … USA. The default browser, on the other hand, told me Safari 4 and Norway. All three IP addresses were the same, so obviously geolocation is not the mechanism.
http://piwik.org/faq/troubleshooting/#faq_65
We’re working on including the geolocation plugin in the core distribution.
Good news: GeoIP is now integrated in Piwik, enabling Accurate Visitors Geolocation in your Analytics reports. To enable GeoIP go to the Settings > Geolocation admin page, and follow the short instructions.
You can also get an even more accurate Country & City Database from here to enjoy top accuracy in detecting your visitors locations.
See also the documentation about Geolocation - Analytics Reports in Piwik.