Housing costs are higher than average (lots of people move to Dexter and Ypsi to get around this, but then you lose "walkable"), and there isn't a huge amount of capacity, and you have to deal with students and avoid student housing.
Great school system. Good parks. Lots of kids.
It's a fine place live. But it's a crappy place to relocate to: if your job starts to suck, or god forbid you lose it, where else are you going to work? The University, for 40% of your current salary?
When you're 20, this is not a big deal. You lose your job, you move somewhere else. When you're 30, you start wanting to own a home. If you have a mortgage, and you don't have a lot of cushion in your bank account (young people with houses often don't), you need 3-6 months warning to relocate.
If you have kids, regardless of whether you rent or own, moving is A Big Deal. I moved back to Chicago instead of NYC because I needed to commit to my family that I wasn't going to uproot them again.
(Half my company is in Manhattan, but our revenue isn't 50/50).
I have friends in Indy with a thriving, well-funded company in the telephony space; I'll try to get one of them to chime in with why they moved their company from NYC metro to Indiana.
Prior to Matasano, I spent 4 years at a VC-funded startup in Ann Arbor, MI --- Arbor Networks. Being in the middle of nowhere is great for the company and crappy for the employees; Arbor was the only credible option for a developer with a mortgage in Ann Arbor, so most of the team was stuck.