I love Berlin, but I recommend Hamburg over Berlin. Here in Hamburg, we don't have super-cheap housing, but there is one big advantage: Lots of capital. I'm currently working hard on getting more entrepreneurial and startup events going in Hamburg, because every time you talk to people from abroad and mention you're a startup in Germay, they all go "Oh, Berlin?" No, actually, we have several nice cities. Hamburg probably has the highest quality of life (compared to Berlin, Munich and Frankfurt). Berlin is fun if you like the scruffy look and hopping from one thing to the next, Hamburg is better if you want to live and build something sustainable.
And it's only 1:40h from Berlin by train... :)