Which would you prefer - live in a cool neighborhood, but cramped apartment VS living away from the action, but in a spacious apartment?

I'd pick whatever is near work (or wherever you will need to commute to).  If you can walk, it makes life SO much better.  The subway gets you down after a while, and a long subway trip in the morning and, even worse, at night is just unbearable--I've done it.

I'd prefer the more spacious apartment in many places, because getting around isn't all that expensive or time consuming. However, in a place like New York, Chicago or Los Angeles I'd go for something local to the things I'd be likely to be doing even at the expense of a more cramped living space.

One thing to consider is what time of day/night you will "take the subway to go anywhere" and whether the subway is safe at that time.

If I were going to live in NYC, I would prefer to be more in the middle of things.  But I don't need a lot of space.  This is definitely something that depends quite a bit on personal preference.

I'd go with the safer area and spacious apartment. If you think about it, taking the subway adds to the experience of getting out. Anything could happen on the subway.