According to this link, iplocation command is available in version 5.0. I'm not sure if this is incorrect or if my installation is incorrect.
http://docs.splunk.com/Documentation/Splunk/5.0.3/SearchReference/Iplocation
yes, iplocation is available in all versions of Splunk. as noted above, it requires that your Splunk instance have access to the internet, as it uses the http://hostip.info service to provide the location information. i've edited the relevant topic to clarify this.
Yes, I've tried to use it per the documented example and it just hangs. I figured out after digging around that it requires a connection to the Internet -- which should probably be documented.
can you be more clear? does it not work in your installation? what happens when you try to use it?