I just wish it wasn't so damn expensive to live here. States like Colorado and Arizona have been on my mind a lot lately since you can get a beautiful house out there for what it costs to buy a condo here.
If anyone reading this is from AZ, let me know.
The startup scene is definitely growing in AZ. There are plenty of interesting people doing interesting things. The low cost of living, increasing number of awesome meetups, and growing co-working community is a pretty good sign of things to come. I've met passionate entrepreneurs at almost every corner of the state. Just off the top of my head--Flagstaff has NACET; Tucson is leading the open data movement; Chandler has Gangplank; Phoenix has CO+HOOT & SeedSpot; Mesa has a wonderful Hackerspace; and Marana was recently elected a top digital city in 2012.
That said, there's room for improvement. There aren't a lot of people with experience investing in hi-tech (lots hi-tech military stuff, but not the hi-tech that HN normally discusses); as a community, we don't have really good marketing muscle; there are few veterans willing to recycle capital; and not a lot of foreign direct investment because people have this impression that folks from AZ are crazy.
I love that place though. You can live in a goddamn mansion for the prices you pay in SF.