We have met several couples who are split between Silicon Valley and areas from Paso Robles to Monterey.
Some have chosen Gilroy as a spot reasonably in between.
That way the more difficult commute between Gilroy and Salinas is avoided, as the person working further South will be going against the heavy traffic (i.e. South in the morning and North at evening). Nevertheless it is a serious commute with two lanes in each direction and a highway that doesn't have restricted access.
The commute to Silicon Valley has become quite good with four lanes in each direction.
Gilroy is a very family oriented environment which has some excellent schools. As in any city, you will want to choose the residential areas a little away from commercial traffic and environments.
The alternative might be Salinas, where prices will definitely be lower, but the commute to Silicon Valley will be very trying. We've seen some who move to Salinas for reduced real estate prices, who then move North in a couple of years because of the commute.
Another alternative is Morgan Hill which is smaller than Gilroy, has a little less choice, and is a little more expensive. (It is where I live and I love it).
Let us know if you want more info ... Wayne 408-858-7199 (Realtor with Alain Pinel)