Other than proximity to Sail Rock and the Full Moon Party, is there any reason to stay on Koh Phangan?
It's a bigger island than Koh Tao with more topside activities, such as a waterfall and temples to visit.
We only stayed a couple of nights many moons ago (not for the full moon party though) and hired scooters to see some of the island. We stayed on a beach on the southwest of the island which was ok but I believe there are some nice beaches in the NW and NE.
We thought about staying on Koh Phangan on our trip this year so I did some research. Some dive shops offer speedboat trips to Sail Rock, eg H2O Original, but I don't think there's much else to write home about in terms of diving from Phangan.
We ended up staying on Tanote Bay, Koh Tao which was great for us with young kids. We did some nice relaxed local diving on the east side of the island with Calypso divers who were great, but we didn't make it down to Sail Rock.
For diving I reckon you'd be best off staying on Koh Tao, unless you're happy just to dive Sail Rock each day from Phangan as I'm guessing you'd be disappointed with the rest of the sites round there.