In the old days you could expect Kuala Lumpur to be the most expensive city because thats where most of the people were and therefore the most demand for goods and services. Not anymore. Now all places are high.
It takes a creative person to seek out a reasonable cost of living. Even in KL you can still find things cheap if you put a high amount of time and energy into finding them. You have to think how and what to substitute, what to change in your own life. You need those skills because I promise you things are not going to be cheaper or better later on. You also have to think how to increase your income. In terms of prices alone, Malaysia is slowly becoming a scary place to live--but so are many other places too.
Before, I could recommend specific areas but I cant anymore. As I travel the country I find that everyone is leap-frogging each other to raise prices. "Well if he can do it, so can I." Everyone is chasing money like I have never seen before.
As far as quality of life, it depends what you want. Some people are excited by a vibrant city life, especially night life. For that, stay in Bangsar, I guess. As for living outside KL and commuting, the jams are terrible now and you can expect a very long commute. In fact, if I were new in Malaysia, I wouldnt take a job in KL itself because of the difficult commute. Putrajaya would be better as an area for a job, and though less jams there is no night life. If you have the budget and your job is in KL itself, you can live around KL Sentral because you have plenty of trains and taxis. If you live outside KL, likely you will need a car. I stayed in Taman Tun and also Sri Damasara which are quiet, nice, near IKEA and 1Utama mall, and I avoided going to KL city most of the time. Rawang is is up and coming place and though a bit further out from the city, its cheaper and quieter.
Penang is not any improvement. Island jams are terrible, and mainland jams and prices are steadily rising. The problem in all the cities is that the government didnt plan the infrastructure to match a rising population. There are not enough roads, and there are very few places to add them. New trains can absorb some of the mess, but there are none in Penang. Few taxis there too. The east side will have to get more development but this cant happen unless the government spends billions for a major highways to there from KL, Penang and Johor. Then jobs can open up on that side.
If I didnt have to work, I would go far outside, either north by Thailand or northeast in the Baling area. Ipoh is a possibility but there is no airport. South, Johor, near to Singapore....I dont see the advantage there but some people might.
How and where to live in Malaysia is becoming an increasing challenge!