I loved growing up in Houston, and everyone I grew up with will tell you the same. You certainly will not pay an “arm and a leg” to live inside the loop. Also, downtown has experienced some major renovation in the past few years, and I think it’s quite nice. It is a driving city, but I like that, and the traffic is not as bad as other places I’ve lived (Los Angeles, Boston).

This being said, there is a huge difference in culture between the city and suburbs.
People who like diversity, culture, the arts, and a “cosmopolitan” feel will love Houston. It is a place where (in my experience) conservatives and liberals coexist happily.

If you want a conservative, sheltered environment for your kids and a small-town lifestyle with the benefits of being connected to a larger metropolitan area, you will probably prefer the suburbs. Since Dallas is a more conservative city, it makes sense that a preference for Dallas tends to be correlated with a preference for the suburbs of Houston.
This is a personal choice, but the city itself shouldn’t be written off because it’s different than the latter preference. Different strokes for different folks.

Other things I like are the green space, the WONDERFUL restaurants, and the great museum and theater districts.

And about kids, the one thing I really appreciated about growing up in Houston (at least compared to Los Angeles) is that the children grow up with a cultured mind and cosmopolitan experiences, while still getting the benefit of a neighborhood, family-oriented upbringing. Another city I would recommend for this is Austin, and certain parts of Dallas.