My 2 cents (I live in San Diego):
Car ? Yes. Definitely. Far too big of a city, and to be honest, the public transportation sucks.
Can’t give you much input on hotels. Really depends a lot on where you want to be (beach or downtown), and what you want to do. And, of course, your budget. The car decision plays into this.
Things to see:
The zoo is a great zoo. But I actually prefer and recommend the Wild Animal Park (about 45 minutes north). The difference is that the animals are out in these huge open areas together. Not just in their own little pens (although some of them are). So you get more of a “in the wild” setting for the various animals. You take this tram through the majority of the park, and you will get to see tons of animals.
I am not a real big fan of Sea World. Every time I go, I can’t get past the “overcommercialised, pseudo-conservation” feel of the place. There are some cool exhibits, though. If you do go, be sure to check out the shark exhibit.
Even if you decide not to stay there, I would recommend at least a visit to the Hotel Del Coronado. It is a beautiful Victorian hotel with a lot of class and character. Coronodo island is just a nice place to visit anyway (great beach, some shopping). The hotel has a great (but a bit pricey) Sunday brunch that is awesome. Just don’t eat anything Saturday night, and go in hungry !
Beaches. Essentially the closer to downtown you get, the more crowded the beaches will be. If you want a little less crowds and maybe some cliffs, head north (La Jolla, Torry Pines, Del Mar, Solana Beach).
History. Old Town is a cool little state park with a bunch of the original buildings. It is somewhat commercialized (lots of little shops), but not too bad. Outside the park are a couple streets with some cool little shops as well.
Mexico. For starters, most rental car companies won’t allow you to take your car into Mexico. So that would kind of limit you, and kind of leaves Tijuana (walk across) as the easiest option. That said, I’ve never been a fan of Tijuana. I see it as a really grungy, bizarre, swap-meet like shopping center. It is certainly not representative of Mexico on the whole. If it were me, I’d spend my time elsewhere.
Food. I’d highly recommend checking out the Gaslamp Quarter in downtown for a wide variety of restaurants. La Jolla also has a great selection. Also, don’t be afraid to try one of the numerous little taco shops all over town. They may not look like much, but you can get some great (big) burritos for really cheap.
That should get you started. Just so you know, we’ve been having an abnormally wet (humid) summer this year. Probably nothing like Minn. humidity, but more humid than normal.