Pros
The best reason is the ability to go to sporting events, concerts at the music school, attend shows at the Indiana University Auditorium, and have all the resources and opportunities that exist at a large state university available. Bloomington is a decent town, and has a great school district if you have children. There are awesome restaurants and a decent night life scene separate from undergraduate students. The bus system is good. The city of Bloomington has a reciprocal agreement with IU so that students, faculty and staff can use their IU IDs to ride city buses for free (covered by the student transportation fee).
Cons
Bloomington is a small town, and very white. While it isn't far, Indianapolis is an hour plus drive on a state road with some slow areas and a number of police cars. People look at you as if you have two heads if you are not a huge Hoosiers fan. The graduate students have some of the lowest compensation structures in the Big Ten. RCM budgeting is taken to the extreme. There is little to no reciprocity, and there is red tape at every turn. The trustees wield an inordinate amount of power. Some facilities are falling apart; some needs are completely ignored, and "temporary office space" is temporary in name only for many departments.