San Carlos has many pros to it, depending on what's important in your search criteria. Great elementary & middle schools, definitely. A vibrant downtown with good restaurants and shops, yes. Nice parks, safe streets, yes, San Carlos is well known for these, and is an incredibly desirable city to live in. If there were any cons to it, and just generalizing, maybe sometimes you get more "house" for your money in similar price ranges in Redwood City, or San Mateo, or Belmont. As a general example, with what $1M buys in San Carlos, versus the other cities, you might find smaller lots and less square footage in a house in SC. Just my experience from having lived in this area 43 years (grew up in Belmont, high school in San Mateo, work now in San Carlos, and live in Redwood City).
In terms of prices being discounted, it's kind of hard to generalize, because the most popular selling segment in San Carlos is between maybe $900K to $1.2M, and we've rarely seen homes get discounted much there. In the "lower" price points in San Carlos, like under $700K, sometimes you do see them sell for 92-96% of their asking price. But, for homes that have been on the market a long time (i.e. over 30 days) in any price range, whether in San Carlos, or San Mateo, or Redwood City, many times they will go for under asking, but only slightly. San Carlos, much like other desirable cities like Palo Alto, or Los Altos, or parts of Menlo Park, have been on the whole fairly immune to the massive discounting you see in the more hard-hit real estate markets of the Bay Area (like the East Bay, Contra Costa County, and neighborhoods like east San Mateo, or east Menlo). There's plenty of good resources on the cities you're considering, and many of the agents who contribute on Trulia have some great, city-specific websites & blogs.