I think bahia and deviant_deziner are the best ones to answer this - they have shown all of us absolutely mouth-watering landscapes that they have created with exactly your challenges.

That is one steep hillside.
I'd probably go with plants that are low water use ,self cleaning and do not require much maintenance due the steepness unless you are into cliff repelling .
A combination of prostrate spreaders punctuated by some contrasting upright strappy foliage and color would be my plan of attack.

For prostrate cascaders I might give rosemary, delospermum, senecio, and lantana a try.
Punctuate with aloes, agaves, beschorneria, phormium and perhaps some leucospermums or leucadendrons.

For a wealth of ideas check out the Flickr site under the landscape designer's name of David Feix. TONS of great ideas. {{gwi:10986}}From Pina Colada
{{gwi:10987}}From Smith Project
{{gwi:10988}}From Smith Project
{{gwi:8553}}From Garden Porn
{{gwi:10991}}From California Gardening

Wow, thank you, those plant options look wonderful!

Notice the above schemes are not planted on as steep a slope as yours. You may have to do something else to stabilize the soil just to get a new planting to take hold successfully. If dirt is actively moving no plant is going to be able to stop it. Slopes take off with trees and houses on top of them, the whole lot going at once.

I'd swear your house is in my neighborhood, sure looks familiar. I've seen slopes here stabilized for planting by using the netting seen in the photo below. Eventually it will decompose, but the plants should be established by then. If you are in San Diego county, take a trip to Rancho Soledad Nursery to view their succulent demonstration garden, which is on a steep slope.

{{gwi:10993}}

bboy and catkim bring up excellent points in regards to erosion.
An erosion blanket or an erosion system would be a step in the right direction.
In several of the photos above jute netting was used to stablize the hill while the plants were getting established.

Here is a series of photos showing a shady mountain side planting . the plants in these photos are not appropriate for full sun location but it might give you an idea of how one type of erosion and hillside planting system was set up. This was a 1:1 slope {{gwi:10995}}From Hillside development
{{gwi:10997}}From Hillside development
{{gwi:10999}}From Hillside development

The coconut coir and jute will eventually decompose( actually it has since this project was installed 10 years ago) and all that remains is the plastic weave somewhere under all the roots, natually decomposed leaves, twigs and branches. Native ferns have mostly taken over the hillside along with some sorrel and other native plants.