The South Bay is certainly cheaper but has no where the amount of culture and fun that living in Mountain View and Palo Alto has. If you're only in the Bay Area for 3 months, I'd shell out some more dough to live in SF or PA rather than be bored in San Jose.
Oh, right, forgot about San Jose. Guess that shows how much time I spent there. But I definitely meant the MV/PA area; Santa Clara is 5-10 minutes from Mountain View, if that.
