In terms of which med school to go to for the best location to live with a family - I would say the more centrally located manhattan schools, so NYU, Cornell, and Sinai. The York Avenue Area is pretty family friendly (Sinai), although None of the schools are really in the baby-boom hotbed of the upper west side, although all 3 of those schools put you in District 2 for schools, which has a high concentration of good schools.
Regarding the NYC public school system -
There are good nyc public schools, and you do not need to be in-zone to go to them. In fact, MOST good school are attended by studnets out of zone, and most students do not go to their zone schools.
At each transition from one school to the next, students must apply to the schools they want to attend, and standarized tests scores are generally used to determine if they get accepted. The basic rule of thumb in nyc is that as you progress through schools, the number of good schools decreases, however, once you are "tracked" into a decent school with a powerful alumni association and a weathier student body, you are likely to get into good upper schools.
How old are your kids? For elementary schools there are a couple that are extrmely well regarded and popular, including PS 6 (upper east side), the Anderson Program at PS 9(upper west side), PS 87 (upper west side), the Lab school, just to name a few. For middle school, it is fairly common for the popular schools to be "programs" inside of bigger schools - so for example, Delta and The Science School (both on the upper west side). Then there is East Side Middle School, Manhattan East and Wagner (upper east side). For High school, it definately does get more limited, and the schools get much bigger. There is a specialized test for admission Styvesant, Bronx Science, and Brooklyn Tech, and there are a number of other good, and interesting schools.
There are 3 boosk that will be helpful for you:
NYC's Best Public Elementary Schools:
http://www.amazon.com/exec/obidos/t...104-8960447-5071162?v=glance&s=books&n=507846
NYC's Best Public Middle Schools:
http://www.amazon.com/exec/obidos/t...5/104-8960447-5071162?_encoding=UTF8&v=glance
and NYC's Best Public High Schools:
http://www.amazon.com/exec/obidos/t...1/104-8960447-5071162?_encoding=UTF8&v=glance
Look at the "customers who also bought this book also bought" and "customers who viewed this book also viewed" sections for these books on amazon, because they have a lot of relevent books, about relocated to the city, a breakdown of neighborhoods, and other good stuff.
Also, to get reviews of schools and info about applying ,and other stuff, this site might be useful:
http://www.insideschools.org/
It is not, however, that big a deal to chose where you live based on schools since the system is so fluid that you can definately go out of district.
Any other questions, please feel free to ask.