My wife and I just got back from SB about an hour ago. Quick 15 year anniversary get away. We stayed at the Coast Village Inn in Montecito. $99 for a small room. We prefer Montecito to SB just because it's much quieter and it's a easy drive into SB for dinner or whatever else you may want to do. We lived in SB for a few years and miss it dearly.
For food I recommend Cold Springs Tavern at the top of the pass on hwy 154. They serve big game and steak and potato stuff, cool little place. For Mexican I like Little Alex's next to the Vons in Montecito, Italian I have to recommend Palatzios, spelling?, Located on State Street in SB I recommend the Penne with bacon. Another Mexican place is La Super Rica on Milpas, great traditional tacos but pricey for what you get, used to be a locals place but then the Montecito crowd found out about it and now it's the trendy place to go.
Great hiking up Cold Springs Cyn, San Ysidro Cyn at the top of San Roque Rd. Find a map or stop in at Mountain Air Sports and ask, they are located on State St. just off the beach.
Have fun