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I think the farther north from Seattle the better. When you go south it kinda sucks.
Renton is on the come up though. I'd try to shoot for the Renton highlands as mentioned. Newcastle is a very nice area but it's a bit more expensive. I wouldn't really go farther south than that. I've lived in and around Seattle.
The east side is nice too, Bellevue and kirkland, etc but the 520 bridge is a bitch during rush hour and they are going to toll it soon. I90 isn't that bad but I imagine with the toll it'll get crazy. The school districts there are nice.
U district area is pretty nice, but maybe not the best for kids unless you go to the Wallingford and green lake area. Seattle schools are decent if you pick them out right.
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