I just came back from SF having used Airbnb (studio apartment under the house) for the duration of my stay. I looked at hotels and hostels, however the night rate of a hotel was simply too expensive and I hate staying in hostels. Airbnb was a cheaper alternative that meant I could actually afford to stay in SF, while there I used the trams, bought coffees in local coffee shops (not Starbucks), ate in restaurants and visited the Exploratorium, all of which I assume SF gets a slice of through taxes.
My hosts own their property and as a result I think they should be able to rent it out on a short term basis if they want to, they should have to pay a (small) percentage tax of the rate they charge though. I think the law should be looked at if for those who own their property. Villas in Europe are rented out legally all the time and it drives lots of tourism and provides accommodation at much better rates than hotels etc.
If the host rents, then their land lord should be able to evict them if they sublet and they're not allowed to - they agreed to the contract and they should stick to it.