I just spent a long weekend at the new Ritz Carlton on 7 mile beach. Hotel is beautiful but huge. The staff is also working the kinks out and the service is spotty at best - especially for a hotel that is charging US$700+/night. I have stayed at the Hyatt (now under going a much needed updating) that is a much more manageable size (but not as upscale at the Ritz) and Treasure Island condos (pretty heavily damaged by the hurricanes). Neither the Hyatt or Treasure Island condos were open and fully operational a couple of weeks ago. The summer before last, we looked into staying at one of the condo's on the east and north side of the island. Opted to 7 mile beach because that is where the nightlife and many of the islands restaurants are located. Allowed us to walk or taxi to dinner and not worry about DUI.
My favorite dive operator (that I have used for the last 6 years) is Divers Down (I have no affiliation with the operation). Best crews on the island. They dive both west (7 mile beach) and north sites...north is only open during summer months. They limit their dive trips to 8 divers. On 2 tank dives, they escort the first (deep) dive and leave the crowd on their own for the second. They will also let computer divers dive their own profile, assuming you can buddy up with another computer diver. For experienced Cayman divers, they will ask where you want to dive and try to make everyone happy with the selection. If you choose DD, tell “Shaggy” Paul I said hello.
I noticed that the reefs were pretty heavily damaged by the hurricanes (versus my previous dives). Most of the shallower soft corals, sponges, etc are gone. Thankfully the fish, turtles and crustaceans are still there. The dive operators did a great job in cleaning up the reefs but you can still find the occasional lounge chair or debris lodged into the reef structure.
A car is not "necessary" but you will definately want one to see the sites (hell, turtle jail, rum point, the blow holes, nature preserve, etc). For a bit of "cheese" go to the Pirate Museum (but be in the right state of mind before you get there - a number of beers will help that).
My favorite west deep dive sites are: Trinity Caves, Little Tunnels, Big Tunnel. My favorite west shallow sites are: Govenors Reef, Chain Reef and Spanish Anchor. If Tarpon is your thing, try a shore dive at Eden Rock. The Oro Verde isn’t all that great but there are a number of fringing reef wrecks that are a quick swim from shore.
Hope this helps.