Um, sorry to be the party-pooper, but as someone who went to college in Boston (the college town of college towns) and now lives by Stanford, I can definitely say there is NOTHING to do in Palo Alto. The bars people mentioned get extremely old very quickly. San Fran IS far. There really aren't people from other schools around for you to meet and hang out with. Palo Alto is all Stanford students and obscenely rich families. I've been here about a year and a half and I feel like I want to crawl out of my skin.
On the other hand, a school is a school. You'll probably hang out on campus most of the time (and the people who enjoyed Stanford socially did precisely that- I'm just not a student so I'd feel weird going to on-campus parties). The weather is unbeatable so if you like going for runs or you like biking, it's a great place to be. I'm not terribly outdoorsy so this stuff is a bit lost on me. Also, Palo Alto is obnoxiously expensive. Everything around here costs a zillion dollars. Housing is expensive, food is expensive, groceries are expensive, you NEED a car, and the mall by campus has stuff like a gourmet hot dog stand (like, 6 bucks a hot dog), gourmet cupcakes, and then Burberry, Louis Vuitton...anyways, this town is a lot more fun if you have money (again, if you're going to be mostly on campus things are a bit different).
Anyway, it depends on where you're from and what you're used to. I'm used to Boston, where I met people from different schools constantly, I could take a subway or walk to get everywhere, and I had an unlimited number of options for my social life. Palo Alto isn't like that at all. If you're from suburbia and like it, or if you have no problem driving an hour to get to SF to get your city fix, then awesome.