Onlywotz - I suppose I was a bit disparaging about Thatcham, but having lived in Newbury that's certainly how we viewed it. Put it this way, we lived on the Thatcham side of Newbury and it was just as easy for us to walk into Thatcham as it was to go to Newbury, and yet there was virtually nothing to tempt you to Thatcham. Many of my colleagues lived there, but only because houses were that bit cheaper than Newbury, they came to Newbury for everything else. Still, it might have changed since we moved away.
wibbleweed, there are plenty of places within Newbury that are very walkable to station, leisure facilities, shops etc. We lived 20-30 mins out of the town centre, and it was a lovely canal-side walk into town. Some of the villages are a bit more remote and with varying amounts of facilities.
As far as schools go, Trinity is very new, since my time, but funnily enough everyone I know with children there seems happy with it. St Barts is always the really popular one, does very well in league tables etc, but I don't know about it's catchment area and how easy it is to get in.
I'm surprised Newbury is more affordable - that's the very reason we moved out and lots of our friends did too, it just got pricier and pricier. Many people moved a bit south-west, e.g. the Bath, Chippenham areas because they are much more affordable, great schools, good transport links etc. Some went to Swindon but I personally wouldn't live there.
How near to London do you near to be? And where are the sets of grandparents you'd like to be nearer? I wouldn't put you off Newbury - we found it a lovely place to live - but in terms of affordability we and our friends found other places with similar quality of life, just more affordable.
Certainly have a look around Newbury and surrounding areas (Hungerford, Marlborough (although again, can be pricey), Chippenham and along to Bath. You probably wouldn't go much further west if proximity to London is important to you, but that area and all the villages in between give lots of scope.
Have fun looking anyway!