I just drove back from Key West today. It's a great place to party and eat, but the diving is pretty poor. The reefs have really declined in the last few years. Also, the visibility two days ago was about 20-30ft on the reefs and 50ft on the Cayman Salver (a ~90ft dive).
Beware of Subtropic Dive. Their dive boat is busted so they're taking people out on a snorkle boat. The ladders don't go into the water far enough and it's almost impossible to climb the ladder in any significant swells or chop without getting banging the hell out of your shin. Also, they had a few snorklers on the boat, so they took us to two reefs that averaged 15 foot, making the visibility poor and the surge pretty bad. Not good diving at all. BTW, their dive boat is supposed to be fixed any day now.
So the second day we went out on the Phoenix out of Southpoint Divers. It's a real dive boat with a good captain and mate (who saved a guy's life on the trip I took Friday - that's another story...), but they tend to pack it full of people. But still, it was much better than the Subtropic snorkle boat. Unfortunately the second dive was a shallow reef.
If you're looking for restaurants, I recommend in this order:
Cafe Marquesa - DAMN fine food
A&B Lobster House - Great food with a great view
Pieces - Very nice French seafood
And there are tons of other places, but those are the 2 or 3 that we never miss.
Also, if you're a rum drinker, check out the sampler at the Rum Barrel. You pick from ~40 different top-shelf rums. Very nice.
And the Conch Republic is good place on the water with live music and a long mojito menu.
I could go on and on. We go to Key West every year and love it. But we prefer to dive in Key Largo. (Which we did earlier in the week, and it was great.)
Let me know if you want to know anything specific about just about anything in Key West or Key Largo.