I've been driving this route almost every weekend (grad student with college friends in the LA/Santa Monica area), so here's my two cents, based on very recent data:
1. The 1 isn't always that bad. If its not friday afternoon/sunday afternoon you can usually do pretty well from Santa Monica and up. The route up the 1 and then detouring through Malibu Canyon is very nice, and hooks up to the 101 reasonably north.
2. If you have a small and zippy car, I'd suggest spending some time on the 192, which is just south of Santa Barbara (pretty much SB --> Oxnard length). If your hotel isn't in downtown this also lets you skip some of the very terrible Downtown SB traffic that happens. If you have a LOT of time and prefer lakes/canyons to coasts, stick with the 192 all the way around Lake Casitas. You'll miss some coastline, but the view on the 101 that you'd miss you can get from Santa Barbara itself, on foot. If you have a bigger car then forget this - you'll be forced to 30 mph almost the whole way. I've done this in a Toyota Matrix and in a MINI Cooper, guess which one I liked more?
3. As lhgreengrd1 suggested, the Funk Zone (the neighborhood just off of State at the southernmost edge of Downtown) is a great place to try wines and stay within SB, there are several local wineries (my personal favorite is Oreana, but that's just me) with tastings available. There's also a lot of great food.
4. On the food front, if you like good mexican make sure you get to Lily's (tacos) and Los Agaves (entrees, burritos, other goodies). The mole sauce at Los Agaves is to die for. Both have two locations now, so don't worry too much about which one. Also hit up McConnells for ice cream; I'd suggest the Downtown location because they do a 3-scoop tasting flight. If you have a (much) bigger budget there's some very nice french and new american restaurants, as well as seafood restaurants. If you have a much bigger budget and enjoy wine, check out Wine Cask or their small-plates wine bar, Intermezzo.
Fortunately/unfortunately ya'll just missed Fiesta. With your opinion on the subject being dependent on how much you like/dislike confetti. :P