hey there, i was in muscat from 2000-06, those were the most memorable days of my life,
muscat is one of the best place to live in(but definetly not like kerala, lungi clad guys will be arrested)it has some of the best beaches in the world, food is cheap, you have liberty to go to church or a temple without any fear,and if you are a muslim some of the best mosques, sultan qaboos grand mosque is one of the best place to do namaz and they have a very good library too.
as far as cost of living is concern prices have gone up in the recent years a single bedroom flat may cost you around 250-300 riyals, a bachelor sharing may cost you around 100 riyals, as i said earlier food is cheap, u can have good indian food in the range of 500 baisa(0.5 riyals) to 1 riyal. and there are some high end resturants also, which may cost u around 5 riyals.
no doubt muscat is one of the best to live.
all the best.