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It specifically needs to be an iPad 2 that has 3G - the first-generation ones can do location tracking for short bursts without running down the battery, but leaving it on all day isn't feasible. (Apple's Reminders app has the same limitation.)

If you have an iPad 2 with 3G, OmniFocus is up to date, and iOS 5 is installed, though, you should have access to the feature. Open, ensure that Location Services are on, and that OmniFocus is allowed to access that info.

The last thing you'll want to check is that the location-based reminders are enabled in OmniFocus' settings.