The other day, my friend Foggy solicited advice as to whether it made more sense for him to move from VA into the District, or stay in VA--from a cost-benefit point of view. I've had the experience of living on both sides of the Potomac over the years--college and law school in D.C., then during my first job living in Arlington, and short stints in Alexandria and Falls Church. Now, after a 5-year period in Maine, back living and working in Fairfax.
Frankly, the suburbs generally suck. You have to drive everywhere--in most places you can't even go grab a beer without having to hop in your car first (and that's always a great idea!). Traffic is absolutely horrible because the road system was designed by a team of low-functioning chimps (at least I hope so, because human beings would have no excuse for it). The layout of buildings for housing, commerce and business is so haphazard and aesthetically disgusting that it could hardly be more inefficient if that was the intention. And the Metro has over the years gotten more crowded, more expensive, and with degraded service, which demonstrates that it is run with a combination of the worst that both capitalism and government monopoly have to offer.
However, as you start making a higher salary you also realize that Virginia has a much lower income tax rate than DC, and this translates to several thousand dollars each year. On average, housing is cheaper, and the cost of keeping a car is much cheaper as well. There is a definite tradeoff for the benefits of urban living. (And, strangely, some people prefer the "car culture" and don't mind traffic that much--if they'd lived in the city they'd be driving everywhere anyway. These people are insane).
What else has to be considered? You can own a gun in Virginia, which is nice if you want to turn your television off and can't find the remote. D.C. does have its share of crazies, but just the other day on the way home from work I nearly hit a bicyclist who was going the wrong way in the middle of the right lane on Route 50. People in D.C. don't get their own congressman, but they're more than welcome to have mine. The school system is pretty awful in D.C. but at least your kids will learn hand-to-hand combat.
On the whole, I'd have to say that I'd be living in the city myself if I wasn't working out in the 'burbs--I'm someone who doesn't like to be dependent on a car and I like being close to things. But for everyone it's just a matter of personal lifestyle.