I'd say Mountain View/Palo Alto more than San Jose, unless you're talking about hardware startups. :)
There's a lot of money up here, maybe more easily accessible than elsewhere. More importantly, there's this energy you feel (eg. go to Red Rock in Mountain View, especially upstairs with people on their laptops) and a "don't talk, ship" attitude, "If that guy can build an app like that, so can I." This leads to more people taking the plunge and seeing if their idea would work. Of course, there are plenty of idea guys here, so like anywhere else, you have to filter out some of the noise. But there are countless examples of idea guys learning development or design and actually executing!
A successful startup scene like Silicon Valley isn't all about location. It's about people having similar attitudes and motivations to follow their passions. A support system like other non-startup people and businesses that understand this mentality definitely help, too. And although proximity to other startups may not improve your odds, having like-minded folks around and feeding off their energy is definitely not to be ignored.
Like many other things in life, I think it's about finding the right balance.