I was in the same situation as you when I started commuting.
I don't live in Cali but I imagine that the law is loosely enforced. My girlfriend is from LA and one of her friends usually rode with only one earbud in and never had problems. He said it helped him hear traffic that was creeping up on him.
I wear headphones that just sit on my ear and keep the volume rather low. A lot of times, wind will overpower the music so that I only hear the faintest hint but it's still enough for me. I can still hear cars just as well without them.
On the flipside, I'd recommend not depending on your ears TOO much. A lot of newer cars are so quiet that even without music playing I couldn't hear their engine. It's a good idea to look behind you (or check mirrors if you have them) often.
Also, I'd say to stay away from something you'll be tempted to fidget around with a lot. I carry an iPod shuffle 'cos it has no screen so there's no temptation to pull it out and scroll through my music.