There are basically two parts to San Rafael, the part north of the Marin Civic Center, which encompasses Terra Linda, Santa Venetia, Lucas Valley, and Marinwood, and the the part south of that which is really San Rafael proper.

The northern half can be a little more affordable, but then you may have to deal with the commute, which can be pretty grueling, especially since they're doing major roadwork to alleviate the problem. Anyhow, this part is really a lot more "suburban" than the rest of the city, with the majority of the housing constructed in the '50s and '60s. Pretty much anywhere here is pretty nice. The Santa Venetia neighborhood by the Civic Center has traditionally been not as nice, but can be a good value if you don't mind smaller post-war houses.

The south part of the city has pretty much a neighborhood for any income level, from Peacock Gap to the Canal. That said, stay clear of the Canal area, which boasts some relatively inexpensive condos and townhouses to rent but can be pretty dicey. Gerstle Park and Sun Valley are some of the nicer, less pricey (overall) neighborhoods for families. My brother and his family live in Gerstle Park and like the area a lot.

I'm sure other people who know more about San Rafael than I do have their own favorite neighborhoods.