+1 to jjandrews, although I agree with Chemistay about the 2br rent estimate being surprising! But Milpitas (or anywhere around there east of the bay) does tend to be more affordable than its counterparts on the other side of the bay where I live, so I can't say I know specifics there. But if your wife can handle midwest weather (and yes it's ridiculously nice out here this weekend, although really I'd love to see some rain at this point) a little longer and there is an option to work remotely at anywhere near the California salary, you should give that option some serious consideration... That would likely give you a chance to sock away more savings and pay down your debt faster, since I suspect your current mortgage is probably quite a bit less than what you would pay in rent for a smaller place out here. But if you're making 100-120k (sounds like your wife stays home with the kids and does not currently work outside the home?) you should be able to live comfortably and build savings living out here too, you may just have to find some areas to cut back to make up for higher housing.
Aside from housing (which is a biggie) I don't think COL is necessarily so much worse out here, but I haven't lived elsewhere in a long time so may just be used to it. I think CA gas is more expensive than most places due to stricter regulations, but if you can work from home sometimes and/or live close to work that might not be a big deal for you. There is quite a bit of sprawl to the Bay Area so it's easy to end up driving more than you might like though if you're not careful.
As to quality of life, yeah it's a pretty nice place to be... watching the news of the latest giant blizzard to hit the rest of the country before heading out for a stroll in a t-shirt is kind of great. Although some people (myself included) do miss having actual seasons sometimes. And we have first crack at all the tasty produce that's grown here, which may not always make it cheaper but it's usually at least fresher and less beat up than the stuff I've seen in stores in other states where it had to be shipped long distances. Mmm, avocados... :)