The only issues are the lack of people and VCs. You can always do contract work for the government though!
SBIR programs are available, which are almost free $$ (you dev a product they need, they'll help pay for its development, and then buy lots of them from you). $70k instead of millions, but they don't take any part of your company in return.
There are apartments by metro stations, but you also have ZipCars http://zipcar.com which you rent by the hour ($9.25/hr weekday in DC, $11/hr weekday in NYC).
I grew up in DC, and now live in NY. If you prefer a suburban life, go DC. If you like the city, NY. One benefit of both places to The Valley is the gender ratio here -- slightly biased for more single educated women than men. I've heard the valley's a sausage party. Although I've heard really good things about LA in this dept.
Another point for Boulder Colorado, some friends enjoyed the tech startup culture there, too.