Oh story, where in the world are you taking place?

So, my WIP (which I'm just starting and really excited about) is making me think a lot about using specific places in writing, and I wonder what everyone's thoughts are.

I tend to trend towards the vague in my writing. For example, unless it is imperative to the story in some way I never describe what a character looks like, because I like the idea of each reader making the story his/her own. If it doesn't matter whether the girl is blonde or brunette, why not let the reader picture her however he or she wants? That's just my personal view, which I am sure many would disagree with.

But what I am struggling with right now is, if the specific city in which a story takes place does not really matter at all, does a specific city need to be named? I think details like those make the story more real, but they also have a limiting effect as well. For example, there are few cities I know well enough to write about with enough authority, and by few I really mean about two. And then if I do pick one, how true to the every detail of street names and such do I have to be?

When I wrote when I was younger (as in Elementary School), almost all of my stories took place in a forest. There was something so freeing to me about a forest - I felt like anything could take place there. Anything went. I believe in one story a tree had a hole in the trunk that a green glow was emerging from... Now I want to go home and find all these ridiculous things I wrote so long ago!

Anyway, this has been my musing of the week, and any thoughts on the subject would be awesome!