Los Gatos is a charming town with many stores, museums, galleries, wine bars, and restaurants worth exploring. Restaurants we enjoyed include: Telefèric Barcelona, Parkside. New Museum Los Gatos ($10/person) is a nice way to spend an hour or so if you like art or are interested in local history. There is also a small but cute farmers market on Sunday mornings.
A thirty-minute drive down Highway 17 leads you through redwood forests and finally to the charming ocean-side city of Santa Cruz. Check out the lighthouse area (aka the Surfing Museum) to look for sea otters trying to steal surfboards from surfers, walk along the bluffs, visit the Santa Cruz Mission, head into the woods to find the Mystery Spot (gravity house tourist trap, but it's fun in a cheesy kind of way), or drive to the outskirts and spend an afternoon at one of the area's lovely wineries (we like Nicholson Vineyards in Aptos).
There are dozens of wonderful state and local parks in this area. Here are some of our favorites: Henry Cowell Redwoods State Park ($10/car) - 101 N Big Trees Park Rd, Felton, CA 95018 Bear Creek Redwoods Open Space Preserve (free) - Los Gatos, CA 95033 Big Basin Redwoods State Park ($10/car) - 20580 Big Basin Wy, Boulder Creek, CA 95006 Castle Rock State Park ($10/car) - 15451 CA-35, Los Gatos, CA 95033 Mountain biking is very popular in this area, and you can rent bikes from a number of retailers in Downtown Los Gatos. If you go to the redwoods, make sure to look out for banana slugs!