Don't live in Spain but my parents have a house in Denia, Costa Blanca and we go every year. I would definately say that you should be able to speak at least basic Spanish..... I guess it would depend on the area and if it's highly populated with ex-pats cos you'd prob be able to get a job in for example and English bar/restuarant..... but I personally think it would be respectful to learn Spanish..... that is one thing I think us English are not very good at is because the vast population can speak English we feel we don't need to learn the Spanish.... my Spanish is appaling but I make an effort to converse.... even at a basic level... like reading a menu/ordering food or asking the price of stuff in shops and greeting people....
I am very envious.... would love to up sticks and get away from this country.... it goes down hill more each year... but it's a big wrench with 3 kids.... not really got the guts to do it... but if it's just two of you (at the mo) then I'd say go for it.....
Lou have a look at Andalucia information, tourism holiday destinations, accommodation, property and culture, Spain. and go on to the forum. ( I warn you the people are not nearly as friendly as on here but they are very informative)
It is VERY hard to find work there, still lots of racism ( where we have our house) with jobs going to the Spanish folk oh, lots of things. We were going to go and live their later this year but our youngest has just been accepted at the London School of Dramatic Art and will need every penny (and more) of our savings so it is on the back burner for a while. Definately go and look at the forum though, it covers every aspect of living in Spain. Also useful, lots of free lessons on the Web for Speaking Spanish.