I heard Cressida Cowell (author of How to Train Your Dragon) explain that she based the stories on an island she grew up on off the coast of Scotland. However, she purposely doesn't name the island or give any further details because her family still lives there and her father is worried tourism will ruin the island.
That said, that's fantasy as opposed to real life... Personally I think if you're going to use a real place, you should dig into the history, the reality of it, as it can only add depth to your story.