Definately agree with Calcruzer about staying in Cambria. If money is no object try the Cambria Pines Inn, (Go there anyway for lunch, dinner or weekend music). If you're on a budget try the Bluebird Motel which is a steal for the area.
(Hey frasier, you were leaving in May...How was your trip???)
Other cities that woud be really great for staying at along this route, but are not "halfway" are Santa Barbara or Solvang--a city done like a Dutch village--(south end) or Monterey/Carmel or Capitola (north end).[quote]
For the record:
Solvang is a Danish village, wrapped around the original settlement Mission Santa Ines. It is easily accessed from 101, exit Buellton. Surrounding area is gorgeous. Treat the kids and yourself to items from the local bakeries then proceed on to Pismo or SLO for your stopover.