There are lots of fun things to do in Surf City; most of them are cheap and many are free.
1. The beach. There's surfing, swimming, kayaking, sailing, throwing frisbees, building forts, digging holes, building sandcastles, collecting shells, volleyball - you name it. On Sundays, there's salsa dancing at the Wharf. There are also buskers and all sorts of transient creative types hocking their wares. It's kind of a throwback, to say the least. Then, of course, there is the boardwalk. The Giant Dipper, a huge and fast wooden roller coaster, is only five bucks, and a big adrenaline rush!
2. Nature. Big Basin Redwoods State Park, just north of Santa Cruz, is the oldest state park in California. But even in and around town there are big, lovely redwoods all over the place. They're nice and they smell great.
3. Farmers' markets. I always go to the one downtown on Wednesday afternoons (and sample all the fruit, yum), but there are also markets on Saturdays on the Westside and elsewhere on other days. The market is nice because it's a gathering place where you can hang out while you do your shopping. I mean, how often do people bond over the citrus selection at Safeway?
4. Taquerias! On Monday through Thursday nights, there are cheap tacos and burritos and drinks at El Palomar taco bar. I love that their happy hour goes until 9 pm. And Taqueria Santa Cruz on Soquel has delicious ceviche (and everything else) and is open until midnight. Again, yum.
5. Dancing. Madhouse on Seabright is free to get into; Rainbow Room at Madhouse on Thursday nights is outrageous. It's a damn good time if you like dancing nonstop to top 40 with the LGBT crowd and getting hella sweaty with a bunch of punks/hipsters/anarchists/stylish people/young people/older people/locals/freaks! Yeah!
These are some of my favorites right now. There will always be more.