More of a quilting oriented fabric store but nonetheless pretty cool - Peapod Fabrics:http://www.peapodfabrics.com/aboutus.htm
Relatively new, kind of small, but good selection of quality cottons and some notions. The owner likes retro style fabrics.
Beverly Fabrics (at Westlake Shopping Center, Daly City) is good for basics for sewing, knitting, etc. Sign up for the monthly mailer and you'll get coupons off for your purchases, usually 30% off a fabrics piece, 40% off one item, 50% off a fabric fold.