A user of a question-and-answer site going by (assumed to be a Donna Summer fan, as s/he goes by the name "On The Radio Uh Oh") had this to say in response to another user querying about the propriety of calling San Francisco "Frisco":

Basically, it's considered gauche and undignified to call it "Frisco". I'm assuming this developed because "Frisco" was commonly used by Midwesterners... and since they were often viewed as uneducated and gauche by cosmopolitan big city standards, the word was also viewed as such.

However, with time, such tradition becomes dated, and thus seems non-progressive and closed-minded, and thus comes to be viewed as uneducated, gauche, and VERY petty itself. And that's what's happening to the word "Frisco". The older generations in the city tend to still cringe when they hear "Frisco", but the under 30 natives (who admittedly are a rare breed) generally don't have a problem with it. In fact, many embrace it... there are even t-shirts with "Frisco" printed, and those shirts have become the only acceptable San Francisco-specific shirt to wear by young natives.

So... if you're around people in their teens and 20s, you can generally say "Frisco" without anyone caring... they'll probably say it, too. I rarely say it, but I have no problem with others saying it... and yes, I'm a native. However, many people, particularly older people (the older a person is, the more likely they are to be offended by the word "Frisco"), don't really understand this, or how people can adopt the word outside of its former negativity, or that times and language change, and thus take offense.

Honestly, I hate it when people call it "The City". That seems far more degrading to me... there are several cities in the Bay Area..."

And in a world where everything's easily accessible and abridged, even in our daily lives in San Francisco, why should its name be any different?

... I've also long had this theory that "Frisco" was taboo because there's a city in Texas called "Frisco".