@Motorolanut: Yes, you are correct. There is a Step 00, while not "technically" a step, it is used (although not that frequently) to maintain pay comparability within localities.
With the High Rate Geographic Areas and the Locality Pay Tables, comparability becomes more difficult. For example:
a GS-7 Step 1 in the highest "locality" pay area of San Jose-San Francisco-Oakland, CA makes $48,864 (base)
a GS-7 Step 1 in the lowest "locality" pay area of Indianapolis-Anderson-Columbus, IN makes $41,851 (base)
a GS-7 Step 1 in a non-locality pay area makes $36,870 (base)
http://www.opm.gov/oca/08tables/PDF/leotb.pdf
As you can see, taking a "lateral transfer" from a non-locality pay area to the San Jose-San Francisco-Oakland area amounts to a $12,000/year increase in pay!
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