DH & I went a few years ago in August - we loved it, but just beware, it'll be REALLY hot & humid at that time! We spent a few days in Miami & then drove down to Key West - it'll defintiely be cheaper to fly into Miami & the drive is really nice. I think we stayed at the Southernmost Hotel - it was just a good, basic clean hotel within walking distance of Duval St. I can't remember the specific names of restaurants - there was a really good local breakfast place we went to - you could ask at the hotel - they have really good pancakes - it's on a side street. We rented scooters the whole time - it was so fun! We took a day trip snorkeling out to Dry Tortugas - it was awesome - definitely go! Just know, Key West is not known for their beaches - if you want a beach maybe spend a few days in Miami on South Beach & then head down.
We had the most fun on the ghost tour though - if you're into that stuff definitely check it out! Key West really is super haunted - they have this haunted doll that they made the 'Chucky' movies after - the tour will tell you all about the stories - & they're real. We always go on ghost tours on vacation and Key West was the best - by far! We even hung out with the tour guide at the bars until 2am talking afterwards - he was so cool - his name was Robert - see if you can get him if you go...
There's a lot to do there - definitely stay near Duval St. They also have a 'sunset festival' to celebrate the sunset on certain days - it's kinda neat. I would love to go back someday!! have fun!