I agree that a setting can be an erotic element, so long as you get it right. I certainly wouldn't try to place my work in a setting where I've never been, or spent only a short time hitting only the tourist highlights.
For me, the nation isn't much of a factor. (I write 'American.') The more immediate setting--the traits of the geographical area through which the characters move and moreso, the places where they stop to do this or that--are carefully chosen and given some detail.
I think a UK setting would be considered interesting or even exotic by American readers. (Magestic old buildings, castles, ancient twisting streets and alleys, country homes, mansions, the ultimate quaint cottages, magnificent churches, regal universities...)
IMO, people read erotica for the turn-on, but education and entertainment in addition to it are welcome, when well-done and seamlessly integrated. I would think that setting in a non-contemporary, non-American setting would be a plus if you make it accurate and interesting.
Maryn, who hasn't been to this board in way too long (didja miss me?)