I have to agree with the previous answers, but you also may want to consider public transportation. There is a train running from Gilroy to SJ. And you will have to check, but there used to be a BULLET or Express train that was a non-stop. There is a carpool lane on 101, so carpooling, hybrid cars, and motorcycles usually go faster.
It really depends on your life style and type of home. Certainly the prices are lower in Gilroy than SJ, and the home prices keep dropping as you get out of the bay area. Keep in mind, you don't get tax assistance for gas and wear/tear on your vehicle, like you do for home ownership.
Have you checked out Willow Glen 95125? Its a cute neighborhood within SJ and the commute to Cisco, Yahoo, SUN, Google, etc... is great!