In books online under "Specifying the Default Collation for an Instance of SQL Server" is says:

Note: The Setup program does not set the instance default collation to the Windows collation Latin1_General_CI_AS if the computer is using the U.S. English locale. Instead, it sets the instance default collation to the SQL collation SQL_Latin1_General_Cp1_CI_AS. This may change in a future release.

We have seen the case where a new database has been created (specifying no collation) and it doesn't get the server's default.
E.g. the server is SQL_Latin1_General_Cp1_CI_AS and the database gets Latin1_General_CI_AS.
From the help, new databases are supposed to get the server's collation if you don't specify one.

I think the problem may be related to the fact that most PCs bought in the UK come set up with English US as default.
When SQL Server is installed it was under English US, but when a database was created it had been changed to UK.

Please could anyone let me know if they have had a similar problem, as this seems like a bug to me.
If its supposed to work this way(ie change collations depending on later locale changes you make), I certainly haven't seen anything in the help.