I lived in SLO for a few years, and have been visiting there all my life. So I have a bunch of thoughts.....my very first being why the heck are you only spending a couple days there???? With the schedule you have, it doesn't sound like you'll have much time to do things besides the Hearst Castle tour. The SLO area is beautiful, and there are a ton of things to do. You could easily spend 4 or 5 days there....or more.

But back to your question. I think it comes down to a couple of things. First, how much do you want to spend. And second, how important is it to stay at a place near the beach? Also, keep in mind that the drive from SLO to Hearst Castle is right around 40 minutes, and closer to an hour if stay in Pismo Beach. If you want to lessen the time it takes to drive there, stay in Morro Bay.

As far as things to do, there are more things to do in SLO. There are nice shops, and things to see. In Morro Bay there are beaches, the fisherman's wharf area, and places to walk. One of my favorite hotels in SLO is the Quality Suites on Monterey St. The rooms are nice, the grounds well kept, and it has a decent full-breakfast that's included in the price of the room.

If you can give more information on the types of things you want to do, I can give you more thoughts on good places to stay. But these are my initial thoughts.