For nightlife etc. - Key West is the place to stay (but not the best to dive) - I would stay in Key West and drive each morning to Looe Key (Big Pine) which is about 20 miles up the road and find an operator who takes you to see the Adolphus Busch (Wreck) and then the Loee Key Marine sanctuary for reefs.
Never actually dived in Key West, but I heard it was not great - maybe someone can post about any decent dive sites there if they've found any.
I don't know really which operator - I went with Looe Key Reef Resort dive center just before Christmas - they do a 3 tank dive on a Sat and Wed BUT the boat is full of snorkellers so they try and limit your wreck dive to a ridiculously short time (as the snorkellers stay on the boat getting seasick while your diving) and they don't do Nitrox...so if you are in a group with non-divers who want to snorkel, this op could be ok for you - if you want to be on a dive boat, it is not so great.