I've lived here for over 19 years - came here in '92 for grad school and never left. You can definitely do a LOT worse than Austin. I played in bands for years (mostly hard rock, metal, punk, and some blues/blues rock) and for the most part had a great time doing it. Here are some of my observations/opinions:
- The city has definitely maintained a unique character and identity. In the late 90s, there was a trend of local restaurants/stores/etc closing and being replaced by generic chain stores, but over the last 10 years there seems to have been something of a resurgence in local-owned businesses, such that now there's a nice balance of the two. You don't have to go far to find a Chili's or an Olive Garden, but there are plenty of locally-owned places that really capture the vibe of the city. Plus you're right in the middle of the greatest barbeque in the world (suck it NC/Memphis/Kansas City!

)
- The music scene is such a part of the local culture that basically everyone plays an instrument and is in/wants to be in a band. The good news is that if you're interested in playing at most any level you can find other musicians. The bad news is that the talent pool is so diluted, it can be hard to find players at your same level with your same goals - i.e., say you want to be in a band that practices a couple of times a week, plays a few times a month, and is good enough to make a little money; you will find guys that are totally committed and ready to jump in the van for the next year for no pay and you'll find guys with bad gear and worse attitudes that would rather sit at home and watch TV than practice. With a little networking, you can meet the right people and find a situation that works. If you're dead-set on making it big in music (which, based on your OP I suspect is not the case), Austin may not be the best place to do that.
- One other good thing about the music scene - we still have a lot of locally-owned music shops, including
Bass Emporium, and a few great luthiers/repair shops.
- There are good school districts and bad school districts. We didn't raise kids here, so I can't tell you exactly where to go, but you should definitely research that before you go. It seems to me that some of the outlying parts of town that are currently booming (e.g., Pfluggerville, Cedar Park) have competitive housing rates and good school districts, so you may want to look into those areas. The downside of living in the suburbs is that rush hour traffic is pretty bad, and public transportation is woefully inadequate; however, if you don't need to work full-time, then that won't be an issue.
- The one huge negative to living in Austin (for me, personally) is the climate. I grew up in PA, and despite what everyone told me when I moved here, I have not and probably will never get used to the heat in the summer (A/C in my truck and everywhere else is the only reason I can stand it at all). From what I've observed I seem to be in the minority - I know a lot of people who moved here from Wisconsin and New York/New England, and they don't seem to mind all that much.
That's about all I can think of off the top of my head. If you have any specific questions, feel free to reply (I don't check too frequently, so it may take a day or two to reply.)
-Y