On weekends I will sometimes drive there (30+ miles) just to have breakfast. They have the best house potatoes! My favorite are eggs with spinach, mushrooms and feta cheese, with a side of house potatoes. Mmmm...to die for! :) And, the atmosphere is great! It feels like a small European place. Lovely!
I happen to feel that the Walnut Avenue Cafe, also known as the Theater Cafe, has the best breakfast in Santa Cruz. There's something for everyone on the menu and it's yum-O! Prices are reasonable and the service is usually good. When they ask you if you want toast, ask for the muffin of the day. Those are fresh baked and excellent, but you have to know to ask. They also serve a pretty mean latte.
I love the breakfasts here, the food is great, the selection is great and the prices aren't bad either. The downside? The hour plus wait. When you are hungry and looking for food in a hurry this is not the place to go. I suggest heading down there about 45 minutes before you actually want to eat.