Key Arena is located in downtown Seattle in an area called the Seattle Center. This is an area that is very historic since it was the site of the 1961 World Exposition.
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Isn't it just like professional sports to "demand" a new arena and then leave? And basically, that is what happened with the Supersonics. Oh, and the reason it it called Key Arena is that KeyCorp game 15.1 million for the naming rights of the arena.
For more information, check out these sites:
http://www.brainyhistory.com/days/november_4.html
http://en.wikipedia.org/wiki/KeyArena
(I don't usually use Wikipedia, but this one cited a lot of sources and used footnotes. So I chose to go with it!)
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