Scandinavia (and Iceland)
There truly is just an inordinately, crazily, scarily large amount of good music coming out of Scandinavia and Iceland (which, if we're being pedantic, is technically not a Scandinavian country) right now. But this isn't just a new thing, or a passing craze that is limited to the type of slightly dark, slightly adventerous electronic pop that you'll see filling blogs and even now moving onto the radio. No, Scandinavia has been consistently pumping out great pop, rock, and electronic music for decades, and there doesn't seem to be any chance of any slow down. It's almost silly to name any individual artists, since there are so many great ones, but whether you're looking for Bjork's eclectic experimentalism, The Field's minimal techno, The Knife's dark electro-pop, Lykke Li's lovelorn ballads, or any other style of music, you'll find an artist to fall in love with from Sweden, Denmark, Norway, or Iceland.
While America has it's regional scenes with their certain styles (although that is largely in the realm of hip-hop), and cities that always produce good music, there is nowhere in the U.S. that compares. Nowehere that consistently delivers music with those sparks and sparkles of magic, wonder and beauty.