There are two aspects to server security and privacy for a good VPN service:
The first is whether the VPN provider's server network is secure and cannot be hacked into by criminals trying to sniff data and personal information or get information about the overall network configuration and principal server.
The second is the location of the servers. If all the servers AND the VPN provider's location are in cooperative regions such as the United States and Europe, the security is about as good as using your local ISP. If none of the servers are in non cooperative or off shore locations, then data retention laws apply to that VPN provider just as if they were your ISP.
A recent criminal investigation involving the encrypted email provider, Hushmail, which is based in Canada, is a case in point. Unbeknown to one of its users, Hushmail (against its stated privacy policy) logged and cached data about the user for months and delivered that information to government authorities in another country pursuant to court orders (this was a run of the mill criminal- not terrorism or human trafficking). Had Hushmail been located in Panama or some other off shore location, it is less likely that Hushmail would have acted on behalf of the police authorities.
If the VPN provider is physically located in a cooperative jurisdiction but has servers in non cooperative jurisdictions like Panama, Russia, China, then this is better privacy. But the highest privacy is if BOTH the physical location of the VPN provider and at least some of their servers are in non cooperative off shore locations. Then data retention laws cannot be enforced and the VPN provider is far less likely to breach its stated privacy policy to log, cache and hand over your data/information/IPs.
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