San Marcos, Texas
If it's time for back-to-school shopping, San Marcos will be-a-hoppin'. That's because San Marcos is home to the Tanger Outlet Center and Prime Outlet Center. The outlet center is HUGE and has some great draws, like Eddie Bauer, Crate-n-Barrel, Pottery Barn, Nike -- over 100 brand-name manufacturers. Check out their website for coupons before you head out to do some shopping.
At the south end of the outlet centers is Cavender's Boots where you can grab your own set of cowboy boots before hitting the rode home.
San Marcos is not really my idea of "hill country town," but it's where I go when I have a lot of shopping to do and want a bargain.
You can still find some charming parts in San Marcos if you venture off (West of I-35) towards Texas State University (don't confuse this campus with mega-large University of Texas in Austin) and the historic town square (E San Antonio & N. LBJ Drive).
The Hays County Courthouse square was placed on the National Register of Historic Places in 1992. Many of the buildings and shops surrounding the square have interesting histories and architectures, from Italianate to Greek Revival. The city of San Marcos has a great brochure (.pdf) that details the buildings, architecture and even some stories of bank robberies and a Steve McQueen movie. Download a copy or pick one up when you get there.
Aquarena Center: Family-oriented outing focusing on ecology, history and the archaeology. There are glass-bottom boat rides of the lake and Spanish ruins to explore. There's also an aquarium -- if you can plan it right, there's a 2pm feeding and a Floating Wetlands Boardwalk. This center is run by Texas State University so you know it's going to be educational (Aquarena Springs Drive).
Wonder World: USA's largest earthquake created cave and the most visited cave in Texas. See the Balcones Fault, from the observation tower, which is the eastern boundary to the Texas Hill Country (Wonder World Drive).