Child-friendly neighborhoods

I live in a small college town, and purchased a townhouse to live in while I attend graduate school. The neighborhood is not bad, I would describe it as 'transitional'. There are a lot of students, and plenty of ethnic diversity. I have neighbors that are black, asian, hispanic, etc... and there are quite a few children on the street. The other day my seven year old was riding her bike on our street and someone who was driving past apparently said to her 'you shouldn't be riding here, little girl'.
Perhaps its for the best that I was not right there, or that person and I would have had words. Our street has no sidewalks, so I am fearful about my kids riding there, but what else am I supposed to do? Kids need a place to play outside. What is the world coming to when a child cannot ride a bike on their own street? It's not like this is a main thoroughfare with a lot of traffic; the only people who come down the street are residents and visitors. We are doing a huge disservice to our own children and society at large by denying children safe outdoor places to play. We wonder why they go and get into all sorts of trouble!