ALONA: If you want to economize, stay at Alonaland. Found it in Lonely Planet Guidebook years ago and always go back. Rooms run from P1600-2500 with aircon, some kitchenettes, and I think they have some non-aircon at P800. It's not on the beach, but you rent a motorcycle (P300/day) and zip right to it. Use the bike to cruise around Panglao Island - I circled it and saw the ostrich zoo, the cave, and many palm trees. I bought food at the local market, which is about 2KM from the beach and used the bike. We had a kitchenette at Alonaland, saved a bundle on food. We barbecued in their outdoor barbecue, whole fish from the market, masarap!
ON the beach, my favorite is Lost Horizon Hotel, next door to Isis but much cheaper and with a better restaurant in my opinion. You can pick your entree fresh from a display, they barbecue it there and serve you quick. Great Mango Shakes! Rooms are P2000-4000 low season, more for more beds or luxury room. It fills up fast because it is the best deal in town for on the beach, so reserve early (30 days minimum).
For diving, I went with Scuba World, near Lost Horizon. They are run by some Brits. But I've dove with several shops, all good. I have my own gear, so just give me air and a lift to the dive spot, I'm good. I go back again and again to Alona, it is great for diving and the beach is fantastic too.
CABILAO ISLAND is great too, but getting there is a pain. Some dive operators will arrange transportation for you (Sea Explorers did mine). I used the Sea Explorers transfer boat, from one Sea Explorers resort to Cabilao. Unfortunately, the schedule is random, if they happen to be transfering a group, join in. They run from Alona, Dauin and Moalboal Sea Explorers Resorts as needed. There is a direct banca boat from Cebu Island to Cabilao Island (Talisay Port), leaving Cebu from a tiny beach on Mahayahay St, off the National Highway near Argao, about once a week. There are no real roads on Cabilao, so you take a motorcycle or two to your resort from the port. Getting around in the Philippines requires flexibility! Power goes off at nite, when they turn off the generators. You are definitely on a remote island.
The long way to Cabilao: You can always take a ferry from Cebu City to Tagbilaran (P800 for Ocean Jet), then a taxi or jeepney to the Sandingan port (think that's how you spell it) and take a banca to Cabilao. Very long journey. Going back to Cebu your hotel can either get you on the regular daily Banca (about P100) from Talisay Port, or schedule a special trip for more (p3000++) - the boatmen try to rob you, rich foreigner. I have stayed twice at Cabilao Beach Club, excellent but expensive, once at Estrellitas, cheaper, not as nice but better divemaster, and heard good things about Polaris. So I don't think you can go wrong with hospitality and diving at Cabilao, just getting there is a pain.