I know a lot of people's family and friends don't even read their blogs but do you or would you let them enter your giveaways? If you are using random.org to pick a winner I don't see why not. They would win fair and square if they do right?
Although I'm giving away a book I myself will buy, the purpose of my contest is to promote literature from my country to readers who might otherwise never have that chance. That's why I had a lot of cognitive dissonance when someone from the same city entered! But yeah, I wasn't clear about my own purpose for hosting this, so I can't disqualify him.
Yeah, it will still be random (and therefore fair) if he is picked . . . but will that also make it right? ;-)