I grew up in State College and then went to Penn State, and it is worthwhile to realize the inherent dichotomy of the town. Penn State is very multicultural and generally tolerant, although leaning a little more to the right than most universities (still overall to the left). The surrounding townships about 15 minutes away are mostly farmland, overwhelmingly white, and decidedly right-wing. The town of State College is the mixing layer.
Races/multiculturalism: In my experience PSU is short on african-americans and hispanics. It's a state school and those are very low demographics in the state. In engineering, women are pretty uncommon as well. I am aware of no overt anti-hispanic racism and little overt anti-african-american racism, although I have no particular reason to be sensitive to either so I may have missed some. I believe gender issues are pretty universal.
LBGT: As I said, the campus is a little to the right for a US university, but is generally tolerant. The only real problem is that as a state school it attracts a lot of ... well ... rednecks. But they are usually under control. None of my gay or bi friends ever seemed to be particularly put down.
Campus: Big, sprawling, and not particularly attractive. Generally pleasant, however, and lots of resources - there is very little that PSU does not do.
Entertainment: The campus attracts a surprising array of shows and acts, because students are in abundance and represent the prime audience. There are also more bars per capita than anywhere else in the state and a good local music scene. There is some typical small-town type stuff (bowling alleys and movie theaters), otherwise head for one of the cities. Also check out the 4th of July fireworks, which is one of the biggest displays in the world and is entirely volunteer, so you can sign up and shoot shells.
Dining: Bars aside, the restaurants are surprisingly good for the area - I have met only a couple of restaurants in the Baltimore area that I would put against Spats or Zola, and they all cost much more. This is also the town where Ben and Jerry learned to make ice cream - check out the PSU Creamery for rich ice creams or Meyer's Dairy for fresh glass-bottled milk and fruitier ice creams - there is no good reason for buying "name brand" ice cream in this town. None.
Housing: Surprisingly expensive compared to other costs in the area, the result of being a college town. With a car you can find houses in the $800 range, downtown that is about what a 1-bedroom costs.
Proximity: ~2.5 hours to Pittsburgh, ~3.5 hours to Philly or Erie or Baltimore, ~4.5 hours to NYC.
Crime: Serious crime is very low - for most of my life the murder rate was on the order of once a decade. Lots of petty crime, mostly DWI or possession, very little that affects those not partaking.
School system (for those with kids): SCASD is highly regarded and provides a ton of opportunities for kids - the result of so many parents in academia. The school is part of the mixing pot, so there is some conflict between groups.
Weather: Not horrible, but nothing to look forward to. A lot of extremes.
