Loudest noise close to you, definitely. The main point is to alert players to how much noise THEY are making. A few squares would be enough to include vehicles, smashed things, or if a zombie barrels through the plate glass window you were standing next to.
The current system of “to the northeast, you hear glass breaking!” works just fine for telling players where other noises are coming from. If you wanted to improve on that, though, perhaps small modifiers for “FAR to the northeast, you hear glass breaking”, or “NEARBY, to the northeast, you hear glass breaking”. That way, the really loud noises that reach players at a long distance will be recognizable as having come from far away, while other noises from nearby will be noticeable as more relevant threats.
As I was typing that, another idea struck me. Perception could be used to tell if a character actually knows how far away a sound is, or even what direction it’s from. A low perception might mean that you still hear the glass shatter, but have no idea if it was close by, or where it came from.
