I think you'd have to go a long way south to get a lot cheaper. Here in northern Italy, things are somewhat cheaper than up there (or at least than in Tirol), but probably not so much that it'd be worth your while to pick up and move (although my standard offer stands: come by Padova and I'll take you out for drinks and/or pizza or something as time permits).
I think to get really cheap, you'd have to go to Portugal, in terms of "south".
Why not move to a cheaper bit of Germany, like Berlin? You wouldn't be so cut off that way: you'd be able to meet and talk with other people working on startups.
I think I'd rather learn a new language than being subjected to the Berlin accent all day. But seriously, I'm still talking about major cities, so I don't think being cut off is that much of a factor. If we're talking about friends and family, even a couple 100 km will do that. Moved a lot recently, worked abroad for quite a while, so right now both material and social ties are pretty low, which is part of why I can even consider this.
Portugal doesn't sound too bad. I'm not constraining myself to neighboring countries.
I think to get really cheap, you'd have to go to Portugal, in terms of "south".
Why not move to a cheaper bit of Germany, like Berlin? You wouldn't be so cut off that way: you'd be able to meet and talk with other people working on startups.