yep - we went to california over NY in 2008 with our 5 year old.
I can heartily recommend san diego - we stayed at ocean beach (like camden on sea) in the ocean beach hotel -right on the sea front - the area has got a surfy/biker vibe but its in no way threatening - sort of biker lite.
Mission beach was also good though and bigger and more mainstream - theres a great restaurant there called the broken yolk.
San Diego zoo is well worth a visit and the park that its in has some good museums - we didnt go to sea world.
we also stayed in a hotel opposite disney for a few nights - handy to walk to the parks - your 10 year olds will particularly like the California side as it has got all the big rides in it.
We also drove out to palm springs for a different feel and onto yosemite national park - palm spring has lots of good value resort hotels with kitchens and great pools though you can camp im yosemite as well or stay in one of the cool desert towns like 29 palms which has got some great kitchy/cool hotels.
In LA itself we stayed at the Farmers Daughter in West Hollywood opposite the Farmers Market and the Grove where all the celebrities shop - good cos you walk across the road to it and so slightly more normal.
Santa Monica was great for a day out from LA if you dont fancy Disney/Universal again - the pier and the town itself are really walkable once you've found somewhere to park.
I could go on for days about car hire and other such dull things [looks wistful]