Yeah, the spriting here is interesting... I'm a fan of the spriting with compass (SASS/SCSS alternative). Could be a good guide as you're improving this. Check it out: http://compass-style.org/help/tutorials/spriting/
I've helped two companies search for space in San Francisco in the last couple months and the market is TOUGH right now. If you find a good spot, grab it QUICK! It will be gone before you know it. Prices are quickly on the rise ($30-40 per square foot per year, $40+ if you want something prime in downtown or by ferry building).
Palo Alto prices per square foot have gone up ridiculously in the last year as well. Seems to average around $60-80+ per square foot per year. There's hardly any space in downtown PA left unless you're willing to include your arms and legs, too...
New listings show up on Craigslist everyday. Seems you get the best deals there if you can grab a sublease which is what my current company was able to do. Alternatively, another great resource for commercial space searching is: http://www.loopnet.com/
N, K, T Muni Metro line makes going from Caltrain to anywhere along Market easy. Also plenty of buses along Sansome/Battery (10 line in particular)! FiDi/Downtown and Jackson Square are the way to go these days it seems since SOMA is pretty much not available. Also Potrero Hill for lower costing nice spaces but you're kind of stuck away from everything it seems like.