We relocated to Fort Collins from California 8 years ago in pursuit of good work/life balance, a strong sense of community, and a good place to raise our young family. We were going to give it 2 years and see how we liked it. We haven't looked back. The schools are great. There are many good options within PSD, with neighborhood schools and "school of choice" charter schools available. People are friendly. We find that our "base" stress level is lower living here, with a more reasonable pace of life and so many family friendly sports and activities to take part in. We are spoiled by the close proximity of everything. People talk about "traffic" when you're trying to get all the way across town at a busy time of day, but it is nothing compared to the long commutes we endured in the Bay Area in order to live in a "desirable" school district and work where the best jobs were.
The best area to live will really depend on your preferences. The Southeast part of town is the newest area. There are several neighborhoods / master planned communities chalk full of families and kiddos. This is where the newer PSD schools are (Bacon, Zach and Bethke Elementary and Kinard Middle School). There are several new housing developments being built, and you have the new council tree shopping center and most of the city's tech employers nearby (HP, Intel, AMD, etc). Old Town is a darling area. Lots of older homes with character on tree-lined streets within walking distance of cutesy shops and restaurants. You'll have more of a mix of college students, older folks, and families and be much closer to the University, if this is the area you select. If you decide to live in the West part of town, you'll be closer to the foothills and Horsetooth Reservoir. Many of the homes there are in family friendly neighborhoods built 20ish years ago, so not as new but perhaps a bigger yard with more mature landscaping and more space between neighbors. Lots to consider.
As for the things we miss or lack in Ft. Collins: There aren't as many big companies/ employers here, making career options more limited depending on your occupation. You don't have the dining options here that you do when you live in a more metro area. We lack a good shopping mall. (However, there are accessible shopping options (Centerra is 15 minutes south in Loveland, Flatirons Mall in Boulder, and plenty of Denver shopping), and Foothills Mall here in Ft. Collins is about to undergo significant "redevelopment". )
Overall, we think Ft. Collins is a great place to live and raise a family. Best of luck finding the right place for you!