How much are you looking to spend on a rental? That really determines where you should look for housing. Traffic on the peninsula is horrendous, but manageable if you can commute off-hours (in early or stay late). Another issue is schools. Good school districts add ~$200k to the price of a home, and ~25% to rent. A way around this is charter or private schools. The issue is that the good charter schools have wait list and/or lotteries to get in, so it takes a year or so gain entry. Luckily, the areas close to Foster City have either very good schools (Menlo Park, San Mateo, Burlingame) or horrible schools (the ghetto parts of Redwood City, across the bay in Fremont, Newark, etc).
If you can afford it, the peninsula, and the Bay Area in general, is paradise. The climate is perfect, the schools some of the best in the country, and the commutes are reasonable. If you can't afford it, it's hell. Crappy housing, unbelievable traffic, atrocious schools, and high taxes. Rents have gone up about 10% per year for the last 3 or 4 years. Purchase prices have gone up 25% in the last two years.
If your jobs pays VERY well, as in $200k plus, then go for it. If not, I personally would reconsider. I write this while sitting in my cube in Palo Alto, staying late to avoid traffic back home to San Jose. I'm happy with my choice, it works for me, but it's not for the faint of heart.