Powell's Sweet Shop in downtown Los Gatos is right in the middle of N Santa Cruz, between the Apple store and the Los Gatos Cinema. It's a chain and set up like the old-time candy stores you might remember from watching Willy Wonka& the Chocolate Factory. They also serve gelato. The movie (WW&TCF) is constantly playing on a flat screen TV at the back of the store and there are about 4-5 mock movie theater seats set up in front of it. So while your little darlings are rushing about the store trying to figure out what they want to buy, you can plop yourself down on a comfortable seat and wish for some piping fresh hot popcorn to go with the movie. There's even a nice selection of root beers & colas in the back available for purchase. This is definitely a cool, sweet place to hang out. But do remember when you check out at the counter that you're also paying for the EXPERIENCE, not just the sweets.
From San Jose, we decided to go to a nice hilly forest residential community in Los Gatos. It is a nice afternoon ride - just make sure your car's tires are well-inflated and that you have enough gas. On I-17S, just take the Summit Rd exit and follow this road going up into the mountain. The views are nice and the trees get bigger as you go in further. There is a property selling fruit - one of the sweetest apples I've ever had. Try not to be too late because it might be hard to navigate through these forest roads, unless that is what you prefer (to sit under the big trees looking at the stars at night - a natural planetarium). This place can also get a bit chilly.