Although I don' t live there, Pacific Grove is "home" for me. The first time I came there 10yrs ago, I felt like I had come home. Fortunately, I am only 1.5hrs away.. but we don't always get there as often as we can! Here are some recommendations:
A great place for a romantic getaway for couples is Gosby House. The innkeepers are very nice; just ask them for the type of room you are seeking. It is located downtown where you can stroll the shops and walk down to lovers point. I also hear (but myself haven't stayed there) that the Martine Inn is great, but very expensive.
Borgs Motel is in a GREAT location. They have maintained reasonable rates for many moons. Right on Lover's point. BUT, this is ONLY a motel, in the cheapest sense. The major complaint I have is that their matresses are like bedrock. But location and price is great. Room is clean, shower is pathetic. It's still worth it's while for some. I still go occasionally... if you do, first recommendation is to get an ocean view room... very nice, since you will want to sit outside your room vs. in it. Second recommendation is to avoid rooms that back up to the adjacent restaurant (the Tinnery). Deliveries come starting at 3 or 4 am.. and it is LOUD!
I have stayed at Pacific Gardens Inn. It's been a few years, but I found it very satisfactory. It is a motel.... not an Inn. But clean, quiet, and they used to offer cheese/wine social hour which is nice for some. In the cypresses of PG, near the water.
Lighthouse Lodge USED to be a fav of mine. I have, in the past 4 yrs had trouble with them. You will see this in the feedback reviews on this site. It is all unfortunately true. They have a WONDERFUL property, with the "lodge" (motel rooms) on one side of the streets, and the suites on the other. I have stayed at both many times, but it has been at least 5-9yrs ago that I had good experiences. The most recent stays have be frought with major mistakes, giving rooms away... wrong rates... I don't know what happened... must've been sold out to the same people that own the Beachcomber (been bumped there twice??? unheard of to me before that experience). I used to like very much to stay at Lighthouse Lodge and Suites. Now I am gun-shy.
Breakfast... I love Toasties. On lighthouse (main drag). I also love Lighthouse Cafe a lot!! Excellent service.
Lunch... varies... I sometimes like to go out to Spanish Bay on 17mile drive.. to the clubhouse restaurant. Very casual during the day.... great only if it is a NICE day and you can sit outside. Sit on the patio and watch the waves and the golfers tee off. Food is mediocre (typical bar/grill food), but I just love the view. Another great destination lunch (again if weather is clear) is to take a drive south to Big Sur. Ventana Inn's restaurant, Cielo, is AWESOME.. if you can sit outside and the coast is clear. I love this place.....
Dinner: In carmel, I love La Dolce Vita. Mission Ranch (Clint's place) is also ok for a steak house. The view off the patio is great, but it needs to be light out to enjoy. In pacific grove, if you like mexican food, Peppers is great. There is also another La Dolce Vita in Pacific Grove that I hear is great (haven't eaten there). Fandago is great too... more expensive, wine list is VERY expensive.. mediterranean fare. If you go into Monterey, Cibo is good italian food (near the Doubletree and wharf). Also on the wharf in Monterey (where most restaurants are mediocre at best), Cafe Fina is actually quite good, and has been around awhile.
What to do... Lovers point in Pacific Grove is one of most picturesque stretches of coast in the area. It is beautiful with walk path. If you seek beaches, Asilomar beach is nice. I also like Carmel River Beach, near mission ranch restaurant, as well as Monestary Beach. But both can be VERY windy. Julia Pfieffer Burns State Beach in Big Sur is pretty cool, but DONT SWIM in the water. The undertoe is deceiving, and there have been many deaths out there. Definitely an "enjoy from the sand" destination.
Just south of Carmel is a natural preserve called Point Lobos. Great for hiking... don't miss going to it southmost point, where you can hike down to an awesome, emerald cove (I think it's called China Cove??? can't remember).
Another jewel in the area that is missed is Carmel Valley... My FAV area. Once you get out far enough, you will find a few wineries, a few GREAT restaurants, like Will's Fargo, some great hiking parks, galleries, etc. The nurseries are awesome out this way too. My fav in Northern CA, as a matter of fact. Check out Valley Hills Nursery. One of my favs. Of course, there are also some GREAT resorts and hotels (spas).
Have fun in my fav place on Earth!