Copy and pasted from my earlier post but...
Restaurants:
Ok, if you go to Key West you have to try some Cuban food and my favorite spot is Jose's Cantina on White Street. The pulled pork is the best on the island and the palomilla steak is something I could eat by the truck load. You must go here. Well, if you want. (edit: I also second El Sibonay)
Cuban pressed sandwiches are ubiquitous. Get one anywhere. The Cuban Mix, Media Noche... great drunk food.
Don't drink coffee while in KW. Get a cafe con leche. It's another cuban thing, its everywhere, its cheap and its awesome.
Steak? Pepe's (on Caroline St.). Actually they say the breakfast is the best part. I love the pork chop and steak combo dinner. It's been there forever and its awesome. Beautiful garden like patio. I always miss staying awake long enough to get there for breakfast but have always wanted to make it.

Seafood? Well, there's a bunch of places but the Rusty Anchor on Stock Island is my jam. Locals only. No tourists here. You will need to catch a cab though. It's maybe a 5 minute ride. Stock Island is like the Germantown of the Keys.
Dolphin Deli. Locals only breakfast joint on Stock Island. Kind of a dive but good breakfast.
Harpoon Harry's. Great breakfast joint near the Half Shell Raw Bar (tourist trap but good for one beer). I used to work at the Half Shell.... Harpoon Harry's rocks (edit: used to).
Dion's. Its a gas station on the corner of Truman and White. I eat there alot because its open at 5 am and its super cheap. It's fried chicken and mac and cheese kinda stuff. good because eating in KW is expensive. Also, be forewarned of super wastoids going in there after the bars close. It's can be like a zoo, the circus, and UFC all rolled into one.
Bars:
This list could go on forever but I'll keep it to my favorites...
Don's. Local drunk tank. It's where the pros go to get their drink on. Not many tourists here.
The Green Parrot (aka The Parrot). Maybe my favorite bar in the world. Its a locals bar off Duval. On the corner of Southard and Whitehead. I like going there before lunch.
Schooner's Wharf. Right on the water, dockside whatever. They open at 6 am. Used to be a derelict haven. Now its pretty tame. They serve food too but its pricey. I love Schooner's.
Dante's. I like Dante's. You can sit poolside and sip drinks and eat pretty good food. It's pricey but everything is down there. It's next to the Half Shell Raw Bar. I like hanging out there.
Bare Assests. Oh lordy... Locals strip club. Pure KW sleaze. Used to be out of control but its pretty tame now.
The Chart Room. This place is awesome. Hard to find. But ask a cabby and they'll take you there. It's tucked away in a ritzy hotel but you can go there. It's small but has a ton of character. Great pre game spot. It's one of the oldest bars in KW. I think someone is buried in the floor.
AVOID: Sloppy Joe's, Margaritaville, and try to avoid Bahama Village at night. It's not pleasant.
Seriously in Key West, when in doubt, just go to The Parrot.

Beaches: There are a bunch of beaches but Zachary Taylor is the nicest swimming beach. I have never been there actually but I have always wanted to go. A cab will get you there or you can just walk down Southard (past the Parrot) until you hit water. It's a locals beach for the most part. Don't be shocked if the water is a bit creepy or if there is a bunch of seaweed (or oil godforbid) everywhere. KW is more of a reef than say, Miami.
Walk all over Old Town. It's beautiful. Flagler Ave., Simeonton, Whitehead, Caroline St... Rent a bike or a scooter and go everywhere. Eat a conch fritter. Keep a beer cozy handy at all times. You can circle the island in about an hour on a bike. Cheers!