We are planning to drive from LA to San Francisco on the scenic route. I have planned 2 nights along the way. Where would be good towns to stop and sleep? The only "must see" along the way for us so far is Hearst Castle. The rest will be spur of the moment. Thanks.

I recommend that you add to your must see list Point Lobos, Carmel-by-the-Sea, and Pacific Grove. Other suggestions would depend on your age and interests. You have a good idea for two overnights-----that will give you plenty of time to savor the sights without rushing.
I'd recommend first stop for the night in San Luis Obispo, second stop for the night either Carmel, Pacific Grove, or Monterey.

We did just the opposite of montereybob's suggestion one year, staying overnight in Monterey and San Luis Obispo. These stops made for easy drives between locations; San Francisco to Monterey, Monterey to San Luis Obispo (via Highway 1 with a stop at Hearst Castle), and San Luis Obispo to Los Angeles (with a stop in Santa Barbara).

The Madonna Inn near San Luis Obispo is about an hour for the stop. Very kitschy and silly.

You will see signs for Anderson Pea Soup. It is often crowded, and their specialty is, well, pea soup. I don't know any Californian that hasn't stopped there on a coastal drive.

Do you have kids? Even if you don't, the Monterey Bay Aquarium is one of the best around.

Me, I'd stop in Pismo Beach the first night, which would give me plenty of time to wander around Santa Barbara en route; and probably Carmel/Pacific Grove or Monterey the second night, allowing plenty of time to hit Hearst Castle, Big Sur and Point Lobos.

What time of year?

Definitely stop/stay in Carmel. Also, I recently watched a fantastic sunset while enjoying some wine and appetizers at the Highlands Inn. We even saw "Carrot Top" there. Pro or Con, you decide

I like Gardyloo's suggestion. I love staying by the beach in Pismo but of course it depends on what time of year you are going. Pismo is a quick drive into San Luis Obispo if you want to check out their downtown. If you don't want to spend a lot of time in the Santa Barbara area, you could drive on a little further to Cambria. It's such a cute little town and it's a great location for the next day to do the Hearst Castle tour and then the drive through Big Sur where you could stay in the Carmel/Monterey area.

I agree with the above posters that either Pismo Beach or Cambria are more charming (and closer to the ocean) alternatives to staying in San Luis Obispo which is a larger town and more inland. SLO is a good 3rd choice.