San Jose, Calif.
In the heart of Silicon Valley, San Jose topped the Forbes 2009 list of most affordable major cities. Although the cost of housing is admittedly high, so are salaries. Another advantage to living in San Jose is that the great weather and ample outdoor resources make it easy to get out of the house and enjoy sports all year long. If your kids are into computers, living where the action is has its advantages, too.
The California economy overall has experienced some well-publicized hiccups lately, but even at that, the weather and other resources San Jose has to offer make it a good choice for a two income family if you have a job going in.