The transport links in Grenoble are good. There are loads of buses and four tram lines. However, after midnight things aren’t so good. Getting a bike is one of the best things you can do. Grenoble is one of the flattest cities in Europe despite being surrounded by the Alpes and there are lots of cycle paths and shops to buy and rent bikes. You even find that when it snows they grit the cycle paths as well as the roads. Transport in Grenoble is run by TAG: http://www.semitag.com/. For buses you can buy tickets when you get on and for the tram you have to buy beforehand and validate everytime before getting on - just like French trains. This can be done at the machines by the trams stops. The tickets for the bus and the tram are the exactly the same and currently last for one hour and a half once you've started your journet. So you can change as much as you want within this time frame. If you want to buy more tham 10, then there is a ticket office in the middle of town. It cost around 200€ for a one year pass. But this is not worth it, especially as if you return home for Christmas. It's better to buy 10 tickets in one go as a backup and then just have a bike. (Um...you can also read Graham Wright's blog on how to avoid getting caught without using a tram pass.)
I went to Metrovelo, http://www.metrovelo.fr/, which is a shop where you can hire lovely yellow bikes. The deposit for me was €90 and then €85 for the year's rent on a student rate. I've used it all year long. It has been completely worth it. I use it all the time, to university, for nights-out and to do the shopping. Also, when the French start striking, it doesn’t affect you if you’ve got a bike! You can read through the website, but basically there are a few advantages with metrovelo.
They have two shops, the main base at Grenoble's train station and another handy one on campus. The bike comes with lights, a basket, a helmet and two locks. My lights didn't work well at the start of the year so I went back a few times and eventually got given a new bike. Generally, I've found its quite easy to get the bike changed - which saves you the hassle of waiting around for your bike to get fixed. You can do this at either shop. I've got through five bikes through the year because I've only ever had moutain bikes and I didn't adapt my robust driving for the Metrovelos. I like to think I'm the Lewis Hamiliton in Metrovelo world, but you really need to be more of a Fernando Alonso driver (don't worry if you don't understand this). They also have cycle route maps and tyre inflation points and offer advice.
The only problem I've had is that they do lack social skills and the staff can be quite rude. But they more or less have a monopoly on hiring these types of day-to-day bikes so you sort of have to deal with it.
There are also loads of markets and a shop on campus where you can buy second-hand bikes, but there is a lot of bike theft in Grenoble and I was told that the majority of these bikes are stolen. Whatever the case, make sure you pay more for the lock than the bike. If not, you've either got a bike that's too expensive and will get knicked or you've a lock that will be easily broken. You're not safe on campus either, I had a English friend who had his bike nicked from outside Résidence Ouest during the holidays so be careful wherever you are.
The association "uN p'Tit vélo dans la Tête" http://www.ptitvelo.net/ is basically a workshop that helps you repair bikes. So if you're into DIY then you could buy a second bike and use the workshop when it breaks down. This is the cheapest option. Take note that it is a workshop - they expect you to fix your bike with their help not the other way around. Also, you may find that previous students leave their bikes when they leave so may just be lucky if you move into a colocation.