Lived there for 5 years, working on 2 software startups. Very nice, though at a different scale and pace than SF bay -- which as the foundread post mentions, has benefits and costs wrt recruiting, turnover, etc. My vague impression is that the attention of investors and teams on opportunities has usually run 12-36 months behind the bay -- putting Austin slightly out-of-phase with bay funding/acquisition/exit cycles, meaning peaks are missed and valleys hit hard. So it's a better place for 5-15 year exit plans than 2-3 year exit plans.
One long-time Austinite thinks the local dominance of Austin Ventures has had a negative impact on the venture-backed software/internet space; you can see his rant in the first paragraph here:
If your startup can't successfully compete with such companies for talent, doesn't that say something important about your startup?
If you can't compete with the best, you're not the best.