Libertarian philosophy is that people have a right to do what they want so long as they don't interfere with the rights of others. The question is; does a porn shop interfere with the rights of others? I think you can make a good case that a porn shop in the wrong place does. A porn shop next to an elementary school playground would be such a case as potentially it would put children at risk to sexual predators.
I would say keep them out of residential areas and away from schools. Require discreet advertising and window displays ( no 50 foot tall naked women in neon lights) and limit access to people over 18. Also I agree with Jonh Dibble's comment that too many can be a problem.
Right and the district should be sectioned off. Also, it should be a fair distance from elementary and secondary schools. As for Keystone's comment, we're already seeing problems arise ANYWAY. My plan is to keep prostitutes out of neighborhoods such as Frankford, Port Richmond, or Kensington and have a much safer trade.