I'm very late to this discussion, but SFUSD schools really aren't terrible, they're just very uneven. SF has an unusually high number of extremely highly rated schools, a large number of middling ones, and a notable number of failing schools.
To see more about this, there's a site called greatschools.net. You can list the schools by API score (adjusted by expectations based on demographics as well). What you'll see is that SF has an unusual number of schools scoring 8, 9, and 10 out of 10. Below that, there are plenty of decent performing schools. And then, there are some 1's and 2's. Pretty grim.
If you list schools in the suburbs, you'll find a similar situation. The big difference is that in the suburbs, you can convert a very high mortgage payment or rent into priority access for a top school. If you can't afford that, you're stuck in middling or poor schools.
SF uses a lottery, where parents list their choices and then get an assignment. If you only list highly in demand schools, you do risk getting a default assignment to a very low performing school across town (you can still get on wait lists). These people often do leave.
Prop H would have recommended giving priority access to district residents. It failed by a whisker. Probably the most interesting thing it revealed is that voters in good school districts favor priority access for district residents, whereas residents in poor school districts don't. Yeah, huge surprise there.
I feel some ambivalence about this, because I do see advantages to neighborhood schools. However, there was an article in reason magazine making a very surprising libertarian case for SF's school lottery...
http://reason.com/archives/2006/04/01/the-agony-of-american-...
Article is a little old, but I'd say schools have improved since it was written.