I don't know this for sure, but I don't think you're going to be able to find a hostel every night of your trip. I know of one between San Francisco and Santa Cruz that is in a lighthouse. You could probably stay there your first night (it's about fifty miles South of San Francisco,
http://www.norcalhostels.org/pigeon/).
That ride is mostly flat with a couple hills. Some parts have no shoulder at all, but the worst of those areas is a downhill strech that is very curvy, so you'll easily keep up with traffic.