I am filing for AOS based on marriage to USC. My mother is an overstay. In form G-325A they ask for city and country of mother's residence. My question is, wouldn't stating a US residence for her cause her (or me) problems?

Thanks for your help

If the question asked for that information, then yes, you must answer according. It won't cause you a problem but since she's an overstayer and DHS is becoming stricter on deporting them, there's no way to determine whether they'd search for her. After an I-130 is filed it's not customary for DHS to ring your doorbell unless an occupant has charges against them. You must input all required, mandatory data.