I've spent the last four years in Lexington (for my undergrad) and I love it. To be in Kentucky it's actually a very progressive place with lots of people with agricultural and environmental concerns. Really fun in the summer; low key, weather is temperate, good food and beautiful outside. Larger cities are fairly close, 1 hour to Cincinnati, & Louisville, about 6 hours from Chicago.
I've found it to be really affordable too. With a roommate you'll be looking at around $300-450 per month for rent and utilities if you live walking distance to campus. About $450-550 if you live alone and $300-450 if you live alone driving distance to campus. Great place for bicycling to and from places but public transport isn't great. Great if you like outdoor sports, rock climbing, etc.
As for bad parts? If you rent walking distance to campus you should be fine. I can't say I've ever really seen a 'bad' part of Lexington.
Good Luck!
'