Its very affordable. You want to spend millions on rent or hire your staff?
college town - perfect for those college grads to entertain themselves after work
Hire students from UIUC, Parkland, ISU, and few other campuses around.
Not great restaurants but pretty good variety of cuisines
Chicago is less than 2 hours away by car
no sitting in traffic for hours every day
only drawback is you cant jump companies every 6 months
air connectivity is limited but Bloomington next door has decent options
excellent place to have a family and raise children
Yahoo is increasing its presence in Champaign, so is Intel, Caterpillar, and a few more. I know they are not startups but there is a reason why they are growing there.
EDIT: But yeah, Illinois :(
Additionally, there are some benefits for startups that stay in town. Rent is extremely cheap (you can get your own bedroom in an apartment for ~$300/month) and you get access to a lot of talented students coming out of the university.