It depends on what you are looking for, as in any location. I have been a life long resident of Lake County Illinois, with exception of a small time (4 years) where I lived in a bad part of town in Hawaii. Most people think there couldn't possibly be a bad part of Hawaii, and really there isn't. It's all a matter of perception. If you are truly concerned about the area, I would ask the local law enforcement.
The market in Waukegan is really a mixed bag from what I've seen. There is a LOT of inventory, however quality may be lacking in that inventory. Houses are inexpensive, and you CAN find a bargain, but you probably won't get a 100% move in ready HGTV show house!
As far as the neighborhoods. Most are safe, there are (as with any town) less desirable places to live. In general, the further north of Grand you can go, the better. The historic district is roughly a .5 to 1 mile area around the corners of Grand and Sheridan. Sheridan road going North is very nice, filled with old mansions. Newer construction seems to be happening on the North and West sides of the town.
I like Waukegan because of the proximity to the lake and its easy transportation routes to the city (Chicago and Milwaukee are about 1.5 hrs either way).