I have a "social" geographic aware application I'm developing, and the million dollar question is how do I list a set of items that are "within X miles" of "my location" since there are million applications that do that, I was surprised to find that only Google Maps API has a free web service for that, and worse, it is only supported if used within a Google Map. So do I have to develop my own distance calculator? is there any free / paid service that will allow me to at least transform an address to a XY coordinate?
I'm sure there is an industry standard solution (either free or commercial) but I'm yet to find it
Actually, Google does have web services you can use on the server side to achieve this.
First you'll want to use the Geocoding API to translate addresses into latitude/longitude coordinate pairs. You can then use those however you see fit (i.e. against your own database if you are storing those)
If the nearby items you want to find are actual places in the world that Google probably already knows about, you can try Google's new Places API which can give you results within a certain radius.
You should note that the translation from latitude/longitude coordinates to distances does require some math, but I think it is best done locally (on the server your application is running on) rather than being farmed out to some external server since it's only math. Googling produced this.