There are usually humpback whales observed along the Central Coast in July; so whale watching is not completely out of the question. Last year there were multiple days when numerous Humpbacks, dolphins, porpoises were seen from boats in the Monterey Bay area.

Take a look at this daily sighting chart from Monterey Bay Whale Watch:


http://www.montereybaywhalewatch.com...s/slst1407.htm

I would not do the drive on Hwy 1 from Morro Bay to Carmel with children that young. Very boring for them. Plus if anyone is prone to motion sickness, it won't be fun.

There's whale and sea critter excursions from Dana Point, right near Laguna Beach, if that's a convenient stop for you. Tuesdays are half-price days.

http://danawharf.com/

Maybe your older kids would enjoy the ferris wheel at Santa Monica?

Henry Cowell Redwoods State Park near Santa Cruz is probably your best bet for redwoods that does not take too much time. Try and visit 14 days if you really want to see the cities and coast properly.
Disneyland is having it's 60th Anniversary this year, think the start date is May 22 but should run all year and they will have special parades and fireworks, etc. Take a look at the disneyland.com website to see which rides the two younger can go on (they usually go by height rather than age) and read up on Rider Switch where one parent can ride with the older children while the other parent stays with the younger children then vice versa.