Davis really is a nice area.
Also, Davis Law is supposed to begin some serious renovations which will be partially opened in 2008 and fully open in 2009. So if older facilities are a concern to anyone, it should only be a partial inconvenience for those starting in 2008.
Then again, Hastings old library should be finished pretty soon as well. I haven't been to Hastings, but a small campus in an ugly neighborhood doesn't sound appealing. Besides, if you really like the city you can visit it from Davis whenever you want without having to live in it.