I just did pretty much what you're planning on doing, on the other coast, I'm on Long Island in NY.
we took a Cape that had 2 bedrooms down and 1 br up, and an atached garage it was around 800sqft down and 300 sqft up, and took the top off, knocked down all interior walls and rebuilt the house. we're not done yet but got sheetrock this week. all told, we'll have 2000sqft when we're done.
some people here had a great list of would be great things to have. Depending on your budget, floor plan size, etc some are more feasable than others.
Foam insulation -great for some climates, I"ve been to SanDiego, i'd probably skip, it costs a lot and its not particularly cold or extremely hot there.
2ndflr laundry is nice, (we skipped it due to size) you should think about the floor drain.
things we did -
ceiling fans in every room, a few sconces,
vaulted the ceiling in the master BR and 1 other, but kept an attic for storeage for 75% of the ceilings.
we picked a few fancy windows for the front eleivation, they cost more the arch pcuture window, the small arch window that we have over the doublehungs in the front, but they really do add something.
this is silly, but in additon to the 2 walk in closets in our master, we have a small linen closet serving the master bath and a SHOE closet serving my wife. she saw one in a house we looked at and has been talking about it for 7 years. its only 2x2 sounds crazy but she loves the idea.
make sure your main linen closet can comfortably fit a vaccum
make sure the other 2-3 brs up stairs are a decent size. no 9x9 brs.
make sure your house looks like a colonial. I can't stand dormers that look like, well, dormers. it should have interest, it should be well integrated into the existing house, it should look like someone built that house that way from the start. some would say that is commond sense, I think in my area probably 75% of construction miss this mark.
its a long and hard process, don't live there while their doing it, and realize it will take longer than anticiapted.
Last piece of advice, don't go crazy on any one thing, especially at the begining. the whole process is expensive. don't cut corners, put in quality materials. However, going with the nicer choice on everything adds up, we've done that, and that isn't wrong to do.
Our splurge was the fireplace, we thought it would be good to have a gas fireplace. we looked at prices online ok $1500, go to the store, this one is nicer $2500, but if you're getting that one, you should at least look at this one $3300, plus install, plus the extra on the plumbing bid to route the gas, plus the mason to add the stone to the front, all told probably $6K. I guess my point is, our lets add a $1500 fireplace snowballed. is it worth it to us? for this, yes. but for other things, self restraint is something needed.
WWW.gardenweb.com the forums over there are great for questions like this. Lastly, don't let the people's houses in the middle states bother you... they are putting in huge formal dining rooms with tray ceilings large mud rooms, study's etc. nothing wrong wth that, but a lot of the things they are doing are not practical due to size constraints, and $$$ constraints that the high cost markets have.