I say reserve a hotel. You're coming from a long way. In other seasons, & other places you can get away with an impromptu schedule, but why risk it. On Hwy 1 the choices are limited in some places and you will want to stay overnight in the best places anyways. Do you want the comforts of a city or the quiet of the middle of nowhere?
If I had to choose a region to spend 1 night between SF and LA, I would choose the Monterey to Big Sur region. Monterey/Carmel for the romantic city life or Big Sur for isolated beauty. Once here you can do the other as a day trip.
If the southern section is more your style then stay somewhere along the Cambria to Pismo stretch. If you're visiting Hearst Castle, this area can be a base.
Or if you want to see the northern end of So Calif stay in Santa Barbara. Here you are 2 hours away from LA.
Just to see whether things are sold out, I checked for availability on Memorial weekend: the San Simeon Pines Seaside Resort in Cambria and the Monterey Hotel in Monterey have rooms available.
http://www.montereyhotel.com/
http://www.sspines.com/index.html
I've stayed at and enjoyed both those hotels.