This works out pretty well for me. I have a cousin who lives a few blocks from Golden Gate park. She's converted her basement into a guest room/apartment. We would've stayed there last year, but she had a guest at the time. Hopefully we'll be able to get it this year.
Also, my cousin has three kids in and around Maggie's age. Maggie is still talking about her week in San Francisco, riding a rented bicycle with mommy, eating mango ice cream, and riding the carousel in the park.
It made for a really good vacation. For about $40, you could get a one-week pass that'd get you on all of the mass transportation (bus, train, trolly) along with about a half-dozen of the local attractions (kids museum, aquarium, etc).
San Francisco has a bus/train/trolly stop approximately every three feet, so it's easy to get from place to place without a car.
San Francisco Travel Hint: It's generally cheaper to fly to Oakland than to the San Francisco airport, and there's a train that'll take you the rest of the way for a couple of bucks. The train goes under the bay, which is kinda cool.