I choose to live in Chicago, but have lived in NY and the Bay Area. SF and NYC are awesome and I love to travel! :-) But I choose Chicago for a lower cost of living, which means my personal financial runway is longer, which means I can take more risks career/product-wise. And, I love Chicago. But I don't buy the argument that residence is destiny. I choose to live by Steve Martin's famous line: "Be so good they can't ignore you." When you're really good, it doesn't matter where you live. I'm not saying I'm that good, but I am saying I strive to focus on the work, not on where I do it. If a potential investor won't invest because I'm not in NY, SF, or whereever, fuck 'em.
If you are really good at what you do, and if you understand how real startups work, it becomes clear that location is the most irrelevant factor to success. I second Jason's views. If someone isn't going to work with you because you refuse to move to South End, Mountain View, or Brooklyn, then they can go fuck themselves. I travel to these places quite a bit though, and I love having a career that brings me to both coasts often.
The Midwest is the perfect place for a startup. Now that being said, Chicago has an entertaining startup scene. Entertaining in that I feel like they are trying too hard to be like San Franscisco.
