Caltrain is already over capacity at peak times. I agree that there needs to be more accommodation near public transport, but I think they'd be better off building more public transport first!
The south bay (south of Diridon) is poorly-served by Caltrain - 3 trains each way per day, weekdays only, no bullets. I think it'd make a great SV extension with its cheap(er) real estate and easy access to SF. I know a lot of SV types with families who are in Morgan Hill/Gilroy because they can actually afford decent family housing without spending 50%+ of their income on it.