I do live in the Bay Area and the only place I have seen Square is at coffee shops and farmers market stands. I don't think it has that much traction and their growth is reported to be poor (or negative, I forget which). The mag stripe reader was a cute hack but when you get down to it the service is pretty expensive and you need a huge up-front investment in equipment, compared to ordinary cash registers which are dirt cheap.
Square is a POS system, comparing it with a cash register is ridiculous. Many POS systems sold to restaurants fly well above the thousands of dollars with shitty UIs that take hours for employees to learn (knowing the turnover in the food industry, it's a lot of wasted time).
