I've read that the optimal size for a city is around 700,000 - big enough to provide services but not so big as to be unwieldy. With a population of about 140,000, Oxford is a fair bit short of that, but as one of the UK's two premier university towns it ranks way above its size as a cultural and intellectual centre. (For comparison, similar-sized cities are Cairns in Australia or Lancaster and Newport in the UK.)
I've posted before about Oxford's bookshops, but it also has an impressive array of other resources. The Ashmolean, the Museum of Natural History, and the Pitt Rivers are the big museums, but there's also the Bate Collection of Musical Instruments, the Christchurch Picture Gallery, the Museum of the History of Science, the Museum of Oxford, the Museum of Modern Art, and the Bodleian Library.
There's a busy theatre and music schedule, especially for anyone keen on choral music. So far I've seen performances of Anouilh's Antigone (the Oxford Theatre Guild, at the Playhouse), the Monteverdi Vespers (the Arcadian Singers and the Monteverdi Ensemble, in the Sheldonian), and classical Middle Eastern music (Oxford Maqam, at St John's). And I've performed in a Javanese gamelan concert as a member of the Oxford Gamelan Society.
And for facilities and resources not available in Oxford - a full symphony orchestra, for example, or a serious opera hall - London is only an hour away by train.