I didn't apply to Penn, so I can't really comment on the strength of it's program or location. But I live in Northern CA, and am somewhat familiar with UC Davis and the surrounding area. With respect to the quality of life in Davis...it's great.
Weather: Like most of CA, the weather is pretty mild. Rainy cool winters, HOT/dry summers, and lots of pollen in the spring for those of you with seasonal allergies.
Location: Davis is a very cute and safe college town, located smack dab in the rural Sacramento Valley, that benefits greatly from having a large university as its hub. Nearby marshlands afford good bird and wildlife watching, and Lake Tahoe's mountains are only a 2 hour drive. My brother often takes day snowboarding trips.
Activities/Culture: There is usually a concert, sporting event, or film to attend. Downtown Davis has a few inexpensive and tasty restaurants and even a few bars that seems to attract a lot of undergrads. One really fun day on campus is Picnic Day, essentially Davis' open house. On this day the town's population nearly doubles with students, locals, and families who tour the facilities, watch Dachsunds compete in the Doxie Derby, and enjoy other festivities.
Transportation: The university and surrounding areas are mostly accesible by bike and bus, but you'll definitely need a car to get to Sacramento (20 min) or the San Francisco Bay Area (1-1.5 hours with traffic). Since the entire campus is very flat, biking is a popular and fairly safe way to get around. There are dedicated bike lines on campus, where even pedestrians must yield to cyclists.
Diversity: Not much. The student population is similar to others in the state university system where White and Asian ethnicities squash out the sparse number of Hispanic or African American students. Since it's a state school, most students are from CA. While CA is arguably one of the most culturally diverse states, I found many students were just like me. One of the reasons I am considering heading to the East Coast or Scotland to gain some new life experiences.