Living outside of the Bay area fit into our calculations when my co-founder and I started TrailBehind.com too. We moved to a 3-bedroom cabin in Truckee, which costs us about as much as sharing a single room in a 3-bedroom apartment in SF.
We're going to be putting a third workspace in there this month.
I actually don't know much about the south bay or east bay, but the north bay has tons of good outdoor possibilities.