I see people riding around Madison on all kinds of bikes. Mountain bikes (no suspension, front suspension and full suspension), road bikes, vintage bikes, cruisers, folding bikes... If the weather is good, you'll see lots of nekkid bikes with no fenders or just a rear rack. The moment the weather gets bad, it seems like every bike you see has fenders (and half the saddles are wrapped in a plastic bag).

Go with a bike that you're happy with, and don't worry so much about style. I *know* I look incredibly dorky on my mountain bike, but it gets me grocery shopping and to the library. And I wouldn't look any less (or more) dorky on a cruiser or road bike. I also get passed by plenty of road bikes fitted out with a rack and panniers . Most of 'em don't have their butt in the air either... it's pretty common to use a more level setup.

If there's a lot of bike parking in your area tho, think about getting a steel bike over aluminum. A lot of the common bike racks make it hard to use a U lock on a big fat Al bike, and it's easy on the steel bikes. I dunno if steel is "realer" or not, but it's a lot easier to park.