(view from my apartment)
Deciding to live with a home stay can be a hard decision for some; it's very nerve racking to think you will be living with complete strangers you don't even know while having a language and culture barrier. However, for me, the decision to live with a home stay family was one of the best choices I've made here in Spain.
By living with a home stay family, you really get to live in a spaniards daily life. You see how spanish family members and friends interact with one another, you hear the spanish language constantly, you eat spanish dishes daily (lunch and dinner mostly, there really isn't "breakfast" here), and you get the opportunity to become part of another family.
My proficiency in spanish has improved drastically while living in my home stay family. Each day I learn new spanish words by either listening to my family or asking questions. Take advantage of your family, ask them how to say different sayings or words because they are more than willing to help. Also, remember that this family has agreed to have you, so they know you will not be fluent. Don't be afraid to ask them for help. I recommend bringing a small notebook, that way when you hear/learn new words, you can write it down with the english translation so you won't forget it later. It's a great idea because at the end of the program you can look back and see how much you learned as well.
From my experience, the spanish food is great in a home stay. You really get to try dishes that are not common to taste in the United States. I have had paella, shrimp, veggie burgers, fried vegetables, soup, many different types of fish and meat, pasta, cheese, eggs, beans, and bread. The difference in the food is that it is all fresh, or home grown. My family has a house in the country side where they grow many different types of fruits and vegetables (they also have hens for eggs). I really lucked out with my home stay considering my padre studied cooking in Italy for a couple of years (Sorry, but I don't think this is common for most home stays).
However, it's very important to know that here in Alicante, seafood is VERY popular. If you don't like seafood it doesn't mean you shouldn't come to Alicante, but I would tell your home stay family if you don't like it or not sooner rather than later (same goes to vegetarians). At least try it though, because that is part of the fun while studying abroad, have a open mind. You never know, you might like it!
I think the most rewarding part of my home stay so far is that I feel apart of this family and not as a guest. I help the family with dishes and cleaning up after eating, I help walk the dog, and also am currently learning the family prayer which is stated before each meal. This may not seem really fun, but it makes me feel apart of the family and immersed in the spanish culture. My best advice is to just assume that this is your family in the United States and becoming comfortable in your house and around your spanish family will be a lot easier. Granted, David is right with the fact that in a home stay it is a lot harder to make spanish friends your age, but at the same time you have a family (you could also have siblings that are around your age which is really fun since they will take you out and you can meet their friends). With a family, you can learn all about their past, what it was like growing up in Spain, and you can also watch spanish home videos with your family (which is pretty funny). However, as for the night life, you won't be spending time with your parents out in the barrio or the puerta.
With that said, by becoming apart of a family, you need to realize you have responsibilities! This means that when you're brother or sister is studying for a test, you can't be blasting music in your room (for the most part the apartments aren't very big so your own personal space is really just your room). Also, it's very important to eat at home with the family for almost every meal (meaning you have to leave the university for lunch and come back to the campus if you have class again, which can be annoying). Furthermore, some friday or saturday nights you may have dinner with other families or friends from spain, so going out with your friends right away might not be possible (you can always meet up with them after).
Overall, deciding between the dorms and a home stay is a very tough choice, but in the end it is about what you want to get out of your experience in Alicante. As you can see, David and I had very different set goals before coming to Alicante, so that's why we chose different living conditions (despite this we are great friends). Think about what you are looking to get out of your study abroad experience and I'm sure you will be able to decide easily (more or less).