You should have no major concerns about living in Erbil. Although I don't live there myself, I have travelled regularly to the city and have many friends, both expat and local. Generally speaking the cost of living is higher than most other regions of Iraq and the KRG, due mainly to its stability and the high number of foreign workers.
What is important, however, is to make sure that you are adequately covered for both medical and accident insurance. The medical facilities are gradually improving, but still fall short of expected standards. AAIB have recently launched a specialised Accident and medical travel plan, which is well worth checking out on iraq-travelinsurance.com.