Thanks for the suggestions, guys! I think we've decided against anywhere broadly east of Campus, because we have lots of friends in Carrboro -- so if we're going to be in or near town, we want to be near them. It may be the European in me, but I really dislike driving, too.(Since we're elderly grad students, we'd only have to go into campus once or twice a week).
I do feel the pull of being near to Durham, and the east side has the advantage of also being easier for Cary, where there are lots of places we love.
At the moment I'm thinking S Greensboro St would be good, since with the junction with 54-15/501 Durham and Cary are a bit more accessible than from northern parts of Carrboro.
About the traffic into Chapel Hill -- yep it does suck a bit, though I find it's not so bad along highway 54 westbound. So it wouldn't be too bad if we were 4-6 miles west of Carrboro (I'd love to live in the area near fiesta grill!).
But in the end, it seems like most of those cool houses are 3bedrooms and ever so slightly out of our price range. But when it comes to places to live, compared to some dreary apartment complex, this would be an absolute dream:
Beautiful Passive Solar House (http://raleigh.craigslist.org/apa/2181589302.html - broken link)
Hubby and I both want to avoid the ubiquitous cheap north carolina apartment carpet, and I want a woodstove, and he wants gas hobs instead of electric, and we want a screen porch, etc etc, but at the end of the day we're grad students and we have to cut the suit to fit the cloth