Dahab Diver:
make sure you go up to the main village to experience the chilled out atmosphere
eg_diver:
yes , I agree staying in Swissinn and other stars hotels will keep you away from the center of Dahab where you can enjoy the unique atmosphere of Dahab
Red Sea Shadow:
I agree with that. Staying at Swiss Inn, Hilton, Novotel Coralia, or other luxurious hotels won't give you the real Dahab.
I hear you guys... but traveling with wife and two kids, we're interested in significant luxury in addition to the diving.

Adventure is all relative.
Dahab Diver, you say the the lagoon where the Swiss Inn is located has "no coral or fish." "No" is such a funny word...

I assume you mean no
large coral
reefs, right? And that numbers of fish can't compare to the large reefs?
The web site of the dive operation where we're going,
Extra Divers, says (my translation from German): "Swiss Inn Beach is the house reef of the EXTRA DIVERS dive operation in Dahab. Directly in from of the base, in a wide bay, is a dive site that makes the hearts of photographers beat faster. [Hey, I'm just translating here; I didn't write the stuff.] Individual coral blocks, scattered across a wide meadow of sea grass, offer room for countless sea creatures. From grey morays to lion fish to sea horses, you can find everything that the Red Sea has to offer... With a maximum depth of 16 meters, the dive site lets you take your time."
OK, that bit about all the fish is certainly exaggerated. But there does appear to be tolerable shore diving right there, though that's not the reason we'd be going there. I do understand that you have to drive to the good shore dive sites -- and the big reefs -- but it's also nice to be able to walk down whenever you want to (from your luxury hotel

), and take a tank out for a casual shore dive with one of your kids.
--Marek