Dear Pat:
Don't miss out on San Luis Obispo. It's perhaps the best preserved pre-American town in California. It's compact, beautiful, and fascinating. The main street has several good restaurants. The mission church has never been out of business, like so many others in California. There's lots of stuff to do and explore. You can even walk on the San Andreas fault. In July, the passion vines clambering up the shops fronts and lots of other flowers should be in full bloom. San Juan has its own, nationally renowned theater company: El Teatro Campesino. Splendid stuff!!! In fact, if I had to choose between San Juan and Hearst's "Castle", I'd pick San Juan every time.
There's a winery just off US 101 south San Luis Obispo (actually south of Arroyo Grande). LAETITIA has a spectacular setting, high on a hill overlooking the ridges running to the Pacific. It's also far enough off the highway for the kids to run around without getting into trouble.
Stay in Pismo Beach. It's a great old-fashioned beach town, with surfers, shops, fish-and-chip places, a pier, a long sandy beach, as well as cliffs (where brown pelicans like to hang out) with small, secluded pocket beaches, and other things to keep kids happy. South of town is a region of huge sand dunes, which is a lot of fun to explore (look for the hidden lakes in the dunes).
Piney Cambria is beautiful, and has nice, lonely beaches, but the kids might get bored.

It is hard to say when the fog will burn off. It could be 10:00 am, 2:00 pm, no fog, or foggy all day. July can often be one way or the other.

I would not stay the night in San Juan Bautista regardless of the fog or not. The only attraction in the area is the Mission which you can see in 1 hour.

I would take a full day to travel from Carmel to San Luis Obispo. Make sure that Hwy 1 is open. It has been closed due to a severe washout. You can always check the condition of all roads and hwys in California from the Cal Trans web site.

Other than that, your plans look pretty good. Someone else will have to comment on the wineries. Even though I am a native Californian, I have very little info on wineries as I do not drink 'adult' beverages.

I do not understand the comment on San Luis Obispo being pre-American. I have spent a lot os time in SLO. In fact we own a timeshare in the area. SLO is really a neat place and is very much a college town beacuae of Cal Poly. However, I would not refer to it as being pre-American. Pismo Beach is OK but highly overated. I would stay in SLO. Are you going to go any further South?

Thanks! I am talking in circles as usual I think. Didn't plan on staying over in San Juan Batista, just maybe stopping on way to Monterey. If we skip it I am wondering if we can see all there is to see in Monterey and then stay there only one night instead of two. That would give us two nights to spend on the trip along the coast instead. (If I could manage all this without having to make hotel reservations everywhere it sure would be easier!)
We are going the rest of the way down to LA and flying out of there. I had planned on 3 nights in LA. We would see Universal Studios in a day and go to Mann's to see the footprints just so we can say we did ("I Love Lucy" and all that). I am not sure if we would be better off to stop in Santa Barbara and make it only two nights in LA. Everyone has said Santa Barbara is beautiful but I am not so sure the kids will care about how picturesque it is.
We are trying to balance kids things with adult things. Any suggestions would be much appreciated.

Oops! Print gremlin. The first "san Luis Obispo" in my posting should read "san Juan Bautista." Cal is right. San Luis Obispo has seen better days, though the downtown is decent.
Personally, I find San Juan Bautista very fascinating. Seeing the mission takes much longer than an hour. After all, it is not a theme park. it's for real. I could stay an hour in the church just praying. And much longer meditating. The Indian cemetery outside the church is also a good place for meditating on the marvels and frailties of life.
I could spend days in San Juan (there’s a pleasant, small motel just outside town. San Juan is one of my refuges, where I go when I need to settle my mind, I once came to San Juan when I knew I was going to die. But meditating in the church healed me. Five years later, I feel better than I have ever felt before.
In some ways, the old town of San Juan is as timeless as Athens, Rome, or Cuzco. Once you relax and let the town’s spirit take over, you’ll feel wonderfully at peace. It’s truly magic.
Of course I can see why teenagers might not like it: no video games, no screeching rides, no loud music.
But, ah, balm for the soul!

Did you get to meet any ghosts while you meditated in the cemetery?

I don't understand why so many people complain about the fog on the California Coast.
I love that fog. I find it mysterious, mystical, and magic. I have taken many drives from the hot interior to the coast, just to be cooled down by that fog--it can feel so good when it pricks my overheated skin with its chill touch.
I don't mind driving in the fog, perhaps because I'm never in a hurry when I drive up and down the coast. I just slow down even more. It is like being allowed to drive through the surreal scenery of a Chinese landscape painting (and on those days when the colors are more pronounced, like traveling through one W. Turners paintings).
I love to stop, sit under a spreading cliff-side tree, listen to the sound of the surf drifting up through the fog, and tune in to the little condensing drops of water as they plop off the tips of leaves and branches.
Even the bark of sea lions and the cries of gulls take on a special quality in the fog; the chirping of nuthatches and finches becomes enchanted music.
Wildflowers glow in the fog like lanterns from a fairy land, and the gnarled trees look like slowly moving shaggy giants.

John:

It is all a matter of preferences. You could stay one or more days in San Juan Bautista. For me, an hour is plenty. You like the fog and I detest it. I prefer this inland valleys where it is warmer and drier. Neither one of is quote right as far as others are concerned. It is just our preferences.

Now fog, is definitely a problem if you are trying to drive Hwy 1, hoping to see the beauty of the Big Sur etc., and you can't even see the side of the road. I would consider that a problem.

I have rarely found the fog to be so dense that I've seen NOTHING. It's not like you're driving in a blizzard.
But should you catch one of those rare invisible days, you can always sit and listen, and meditate on the state of your soul.