I am at SUNY Albany, a commuting PhD student. Cannot give any recommendations for housing arrangements. But from what I hear and see, there is nothing inherently wrong with living in Albany.
Generally Albany is pretty good for everything -- there are enough cultural events for theater and music lovers (e.g. the Egg, Proctor's in nearby Schenecteday), outdoors activities (proximity to the Adirondacks, Lake George) and a goodly selection of campus activities. Washington Park is lovely year round, food is reasonably palatable and cheap.
It really depends on your tastes and budget.
In my opinion Albany is fairly generic -- generally safe and pleasant (exception: Arbor Hill), a bit rundown but with unmistakable signs of former prosperity with historical architecture aplenty. The governenment buidings dominate the center of the city, which means it becomes dead after 4pm. Commute is very easy, and there are really great nearby neighborhoods adjacent to Albany proper.
Your fiancee may have to do some adjustments to find a teaching job. Most public and private school teachers have Master's degree and, I believe they need NYState certification. Finding a rsuitable teaching job will take some serious looking, unless your fiancee teaches math or science; then it may be somewhat easier.
The climate is rather trying. Winters are real winters, and summers can be hot. But spring and fall are really lovely and long -- it just occured to me that Tulip festival is coming up -- my favorite event!
Hope that helps a bit.
Oh yes, and you will need a car.