That's the thing - it's not the area around campus to avoid. That area's fine, if a little boring and suburban for my taste. There are neighborhoods downtown where the students tend to live that are just plain gross, but it's tough to describe them to someone not familiar with the area.
Me personally, I would def. live in downtown Albany rather than in the surrounding 'burbs. It's much closer to school and Albany is an amazing little city. But I'm not really a 'burbs kind of gal. Cohoes is crazy far, particularly with so much good real estate closer to campus. Colonie isn't bad - that's where the main SUNY campus is technically located. The closest suburb besides Colonie is probably Delmar, which is also not bad. Or Rensselaer. But again, I'd stay within the city limits.
Parking in Albany is pretty easy - near the capitol and in the business district it's all metered, but most of the rest of the city has free street parking. Just pay attention to the signage (occasional trick alternate-side stuff) and you'll be fine. Plus many places have off-street parking.