Ideally, I would think not. They should be at the county level-- or if the state is large (in population), perhaps even the city level. But if we don't know which county or city they lived in, then I guess we fall back on the state level.
Having said all that, I'm not sure what value adding people to location categories provides. I suppose lacking the ability to search for people by location, a location category could help but only if every profile was so tagged. Seems to be a better investment to improve the search function.
