I can't believe everybody is suggesting Houston. I used to live there and I wouldn't again unless I was getting paid $500,000 or more a year. The traffic is horrible and it take hour to go anywhere.
Austin is AWESOME and prettier than Houston but its traffic is getting bad too. I would suggest San Marcus because you are close to Austin, New Bransfels and San Antonio. Also Southwest college is there so there is plenty of hot women.
As far as activities, the best lakes in Texas are within a hour driving distance, Lake Travis is the best lake in the country and then you Lake Austin and Canyon lake too. You can go tubing in New Bransfels and the hill country is awesome to tear up either on a motorcycle or sports car.