Knitty by the Sea is by far the most knowledgable and well-stocked knitting store in Monterey County. The owner is always there to help you, and offer advice on the best types of yarn and needles for your project. They stock high quality, gorgeous yarns that you just won't find at a multi-craft store like Michael's.
Like any store in Carmel, parking is always an issue - but that is more the city's fault than the store's, and is just something you have to be aware of and prepared for whenever you come to Carmel for any reason.
The only other complaint I would have about this store is the price. It is very expensive, and so I save my shopping here for my most important projects - the ones that require the highest quality. For anything else, I just go for the cheaper stuff at Michael's. If you need high quality yarn, though, this is the place to go!