Maybe. San Francisco is unique among major American cities in a number of ways and it has a special charm to it. I don't think that a generic substitution of Santa Cruz vs ($BIG_CITY) would favor the likes of Seattle or Houston or Philadelphia to Santa Cruz.
I would agree that Santa Cruz is nicer than anywhere in Santa Clara or San Mateo counties, and there is probably good reason so many people put up with the commute over the 17. The real issue with Santa Cruz (if it is even an issue) is that the whole town is on a perpetual summer vacation (especially the college students!). Boudrillard has some very choice observations of Santa Cruz in the 80's that more or less ring true to today. And Santa Cruz is full of interesting characters and it is quite cosmopolitan for a place its size, it also feels as if everything has gone to seed.
I don't disagree although the list of arguments against living in SF seems to continue to grow--though you avoid some of them (though not cost) depending upon where you live in the city. I'd actually argue that Seattle and Portland, OR have at least some of characteristics that make SF attractive. Of course, there are other cities in the US that are attractive as well but they're very different from SF, e.g. Denver/Boulder, NYC, Boston...
