The Palo Alto Daily highlights both national and local news. I recently stopped getting the Mercury News for I found their reporting to be extremely biased and incomplete. The Daily is free of charge at many of the local coffee shops and gives a quick run down of key news worthy events. Since I also listen to the news on radio I find the combination of the daily and radio gives me the info I need and does not frustrate me as much as reading the Mercury News used to.
The Palo Alto Daily is generally a good source for information about the local community. They tend to be a bit sensational in their reporting, and the quality of the editing is sometimes not the greatest. Still, I can't help but pick up a copy each day, and often find some item of interest (in addition to the Sudoku and crossword puzzle).
Unlike the Weekly, the Daily is a bit more controversial. They like to focus on the more juicy items and highlight conflicts (amoung city council memebers, etc.) They also report some local and national news (from the wires). Their editorial staff is undergoing a change, so they may be toning down a little. Reporting may not always be accurate--a little one sided--but it is interesting reading.