I am also from Austin, we lived in So Cal for over a decade then Canada for 2 years and finally made it to Austin 8 years ago. I live in the Round Rock school district but am considered to have an Austin Adress. I live off of Parmer near the 620, which is NW Austin. This area is very family friendly. Children's is off of the 35 freeway, but I MUCH prefer the area off the 183 freeway and really nothing is far by California standards. Traffic is very much limited to rush hour and even at its worst it is not that bad.
Schools in Round Rock are better close to the 183, and are good but less so as you move towards and across the 35. There is a new build area called Avery Ranch with very nice homes in the $250,000 range. A little farther up the road and in Leander schools is Brushy Creek. You can buy home there starting below $200,000. Smaller (by TX standards) and older exisiting homes in nice neighborhoods in Round Rock schools can be had for around $150,000-$180,000. Of course it is more for bigger homes. All of this is NW Austin which is full of families.
We really have grown to like Austin. You can't beat Zilker Park- if you like parks and hike/bike trails you are in for a real treat. Austin has some of the best I have ever seen. I love the botanical garden at Zilker. In the summer the bats come out from under the bridge down town and it is always fun to watch that (bats eat bugs, so we like bats!). There is always live music and great bars downtown. Too much to list, it is a University town so we have night life (although at 37 I feel OLD in most of the 6th street bars- lol).
Places to eat- Austin has more per capita than any city its size- there are a good years worth of unique dining joints. Two Austin Classics that come to mind for me are Kerby Lane- which is eclectic American, I guess. Kirby Lane has several locations, one not far from the hospital on Guadalope St. Another Austin classic is Hyde Park Grill which is Midtown. You can't miss the giant fork and fries in front of it. Two doors down is a fantastic icecream place. Again a sort of American food menu with flair. Ethnic food abounds and there is great Indian, Mexican, and Asian food in Austin.
There is a great family friendly Holiday Inn Express in NW Austin. My inlaws stay there pretty often. It is very clean, near a Mc Donalds, and across from the mall. It runs about $79 a night. This is in the area I most recomend for living with a family. Closer to the Children's Hospital is a bit, um, not as child friendly... either run down or expensive... Embassy Suites North is really not very far North and it is off the 35 (so close to the hospital). If you have kids the free breakfast and happy hour plus the extra room make it a good value. We stayed there when we were house hunting
IM me if you want the name of a really nice relocation realtor. He is extreamly laid back, but he has a good website and knows the market here really well. If you ask he will send you a packet on Austin with lots of relocation info, school info, and so on. We moved from Canada and only had 4 days to decide if we were comong AND buy a house! We got it done and still made it to happy hour at Embassy suites most nights
Oh and because this just came up with my parents (who are moving to Austin next year)- Don't even think about living "near" the airport. It is not a nice area. I guess there are some new areas being built that look really nice online.