If you want a more scenic coastal setting, choose Pacific City. If you want more tourism attractions and hospitality options, choose Lincoln City.
Pacific City is a small town and is picturesque with the beach overlooking Cape Kiwanda and the offshore Haystack Rock. It has limited lodging choices. The go-to place is the Inn at Cape Kiwanda, but they also operate the Cottages at Kiwanda, a luxury oceanfront property. The Pelican Pub and Brewery is located nearby and the area is popular with a younger crowd and surfers. Vehicles are allowed on the beach in Pacific City.
Lincoln City is a larger community with extensive choices in lodging from oceanfront resorts to hotel chains along the highway and budget choices. For oceanfront, consider The Coho, Pelican Shores Inn, Surftides or the Inn at Spanish Head. For something a little more boutique, consider Starfish Manor or Shearwater Inn. For something funky, try the Historic Anchor Inn. There are some great restaurants in Lincoln City and no vehicles on the beach.
Pick your style.