OMG there are so many nice hotels there. I like the bed and breakfasty type places. They are all really well kept and they seem so private:
http://www.keywest.com/guestinn.html
If you like the bigger hotels and want to be by the beach you can try the Hilton, this hotel and spa is lovely too
http://pierhouse.com/photo04.html
DO NOT STAY AT THE RADISSON OR DAYS INN yuck yuck yuck and not good for getting downtown.
If you want to see all the fun Tanker and I had in Key West for Spring Break check
www.melonjoint.com