I've been asked many times if setting is important to a novel. It certainly is, though in what way depends on what you're writing. That's a big help, isn't it?
Obviously, the setting in some novels is so much a part of the story that it couldn't take place anywhere else. Gone with the Wind, without the setting of the South and the Civil War, just wouldn't be the same. At the risk of angering a few, I dare say it would be just another romance novel. A very well written one, certainly, but the time and setting are what give the story true power.
Setting is equally important in One Flew Over the Cuckoo's Nest (mental hospital), Stephen King's The Shining (haunted, snowed-in hotel), and Jaws (shark-infested waters), by Peter Benchley. In each of these examples the location of the story is every bit as important as the story itself.
But many excellent books are written in which the locale could be anywhere. If the story is character- or plot-driven, the setting is often incidental. For example, Sue Grafton's excellent "alphabet mysteries" (A is for Alibi, B is for Burglar, etc.) are set in the fictionalized city of Santa Teresa, California. In interviews Grafton has stated that Santa Teresa is modeled after her own home city of Santa Barbara, and that she chose to fictionalize it so she can create businesses, streets, political figures, etc., as she pleases without offending anyone. These mysteries would be every bit as effective taking place in Arizona, Florida, or anywhere in between. It's the character, Kinsey Millhone, around which the mysteries revolve.
But even if you do decide to create the location in which your story is positioned, it's still important that you give your readers a sense of being in a real place. I've found it helpful, when describing a place for the first time (whether it be a town, a house, or even just a room), to do so through a character's eyes. By using this POV, the reader not only sees what the character sees, but also picks up on the character's feelings about the place, which will undoubtedly affect how your reader feels about it as well.
Include as many of the senses as you can. The interior of a barn holds a distinct set of odors -- so have your character react to the odors, and maybe even step in a big steaming pile of ... something. Don't just list the generalities of a landscape or the items in a room -- have the dusty lace curtains cause your character to experience a sneezing fit. Smell is one of the most evocative of the senses.
While your setting creates a backdrop for you story, it also impacts it in many different ways. Allow your setting to take on a life of its own. It will add bulk to your story and carry it along to places beyond the imagination.
"Scenery is something you have merely looked at; place is something you have experienced." Paul Gruchow.