While I have never stayed at the Club I have friends who have several times and they really like the place. As a matter of fact we have a group going at the end of this year (2012) and they are going and will rent the condo again rather than stay at Little Cayman Beach Resort itself. You will probably have more privacy there for your group. The folks who book for LCBR also book that place but don't push it too hard. They told me the people who own them like a little income from them but don't want them overused.
Anyway, as far as food goes, you will find it pretty tough to get much variety. But if you stay at the Club you can get on the meal plan at the LCBR and the food there is excellent! They serve buffet style and there is always plenty of choices and again it's very good. I don't think you have to do all three meals with them but you'd certainly want dinner with them. A lot of folks take the two meal plan with breakfast and dinner.
But like others have said, there's not much to do other than read, relax, and dive but if that's OK with everyone and reading and relaxing will fit their bill, then Little Cayman would be a great place.