Please please please don't buy into Croydon bashing! State-schools wise, you could probably do better, but there are a number of good private schools (Whitgift, Royal Russell, Coloma, Croydon High etc depending on your DCs' gender and ages).
Personally, to save your husband a long commute, look towards South Croydon/Shirley/Park Hill. There are lovely areas no more than about 15 - 30 minutes' walk to East Croydon station - look around the avenues near Lloyds Park, Sandilands and Coombe Road tram stop etc (though, ironically, the houses there may be outside of your price range!). A bit further (3 miles out) are Purley and Sanderstead.
Funnily enough, DH and I used to rent in Barnes before moving to Croydon. When we moved, I swore that we would be out of Croydon in 3 years and back in Barnes. 6 years on and counting, we're still here (by choice, as opposed to financial constraints) to the point where we've decided to stay here long-term so if and when we decide to get a bigger house, we will be keeping our search within Croydon borders. Admittedly, the road on which we currently live isn't the prettiest, but East Croydon is a 20 minute walk away, Park Hill, Lloyd Park and Ballards Plantation (beautiful green spaces) are just over half an hour away. Before DS arrived, we would spend weekends exploring Croydon and going for long walks through Croham Hurst (wooded area) and Ballards Plantation. Croydon town centre isn't what you would call pretty, but it's got tolerable shopping. Croydon Ikea is a godsend for when you need to pick up bits and bobs moving into a new home (it's very functional, convenient and cheap for what it is). We tend to use Oscar Dahling antiques shop on Cherry Orchard road when looking for more interesting furniture. Purley Way shopping area has the big warehouse-type stores (I don't like to think of how much money I've spent in the B&Q gardening centre over the years!). For everything else, central London is a 20 minute train ride away.
We couldn't live without our current neighbours who are brilliant (two of our neighbours are builders who have done lots of work and garden landscaping for us since moving in, one is a childminder who takes care of my 9mo DS etc). When DS is old enough, we'll be sending him to Royal Russell (another of our neighbours teaches there!) which I personally think is a fab school with huge grounds and great facilities (they cater from age 3 upwards). There are a number of wonderful Sure Start centres (Tunstall Road nursery being my favourite) which run baby and toddler groups.
I could go on and on, but I'll stop now It has its problems like every other area (personally, I would avoid the areas around West Croydon like the plague!) but, suffice to say, Croydon is not as bad as people make it out to be.