Where in SF Bay Area should I live?

You have three major choices: The 'real' Silicon Valley, centered around Sunnyvale/Mountain View/Palo Alto, the southern extremity of it, centered around San Jose, and San Francisco, which was not considered 'Silicon Valley' per se, but over the past decade has come to be home to some of the largest companies that came out of the Bay Area. Each has its good/bad points.

If you want to raise a family and have schoolgoing children, then I'd suggest the original Silicon Valley, as it is pretty much suburbia with a lot of things geared toward children. If you have no children and never plan on having them, then San Francisco and environs are better suited to you (SF is one of the most childless big cities in the USA). If you do not mind a commute on public transport then you can live across the bay in Berkeley and surrounding areas also. Finally, San Jose and surrounding areas are also home to a large and varied array of tech companies but there is less of an environment for getting together with other tech people and such, which happens more often in the other two major areas I have mentioned. However, San Jose is surrounded by lovely towns such as Saratoga and Los Gatos, and is also reachable from Santa Cruz (the commute is dangerous and can wear you out), which is great if you like beaches and surfing.

Pricewise, San Francisco is very expensive, then Palo Alto, Mountain View, Berkeley, Sunnyvale, and San Jose areas. San Francisco, Oakland, and Berkeley have much higher levels of property crime than the other areas, and also have a much bigger homeless problem. These can affect your quality of living, so choose wisely.

Outer Sunset District, San Francisco. Quiet, near the ocean, easy to get to downtown or other neighborhoods.