I liked Osaka when I visited (very, very briefly)-- we stayed in a hostel at Nagai Kouen, which was a really neat park. We really enjoyed the people who hung around...kids on field trips, guys doing bike tricks, etc.
But if I was going to pick a place to live in? I'd be really tempted to live in Kanazawa, which was outright gorgeous. Not terribly convenient to Tokyo via train, but it just seemed like a really nice city. (
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