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How small is the house in Washington Park? If you are thinking about having kids then you might want to consider the larger house. You're setting yourself up better for the future.
I live a few blocks from the home in Berkeley. I'm sure you would love either area. Check out the Berkeley area photo tour a few threads down and just spend a day in the neighborhood. Walk down to Tennyson Street.
As mentioned, you should consider your commute to work. Both areas are probably pretty walkable. I know your place in Berkeley would only be a few blocks from a Safeway, a coffee/sandwich shop, Billy's Inn, Tocabe, Cafe Brazil and a few other restaurants.
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