If that was the only correct usage, then people would live on Indiana, and not in Indiana, etc. Also, you'd be driving in the highway and not on the highway.
Except, a state or a country is a fictional (purely invented by man) invention, so you live "IN" it's definitions, rather than on a particular physical place (like a street).
Maybe it is a regional thing, as I've never known many people to say they lived "in" a street, except maybe the Mutant Ninja Turtles.
But the one that gets me is:
She sat on his lap.
She sat in his lap.
I believe they're both correct.
That's because lap refers to two separate things, what rests atop it, and what you hold in it. It's a matter of degrees. You hold a plate on food on you lap, but you hold a loved one in your lap. One refers to inanimate objects, the other to intimate relationships.
Of course, I'm not sure whoever made this up, but that's how I've always thought of it.
Given no other clues, I would assume a house *in* Maple Street is in UK, and *on* Maple is in the US. *In* is, indeed, the correct usage in British English.
I guess I've been blind all this time, because with all the British English books I've read (include the Aussie books), I've never noticed the "in"/"on" dichotomy before. Talk about unobservant!