Not a lot happens in Rawai its a fishing village, however if your into seafood.. its paradise.
Buy your seafood at the beach, take it to one of the many restaurants across the road and they cook it for you. Rawai is a very quiet area far away from the hustles of Patong. I prefer to stay in Kata, but its over run with Russians now and as mentioned a trip to PhiPhi is a must, checkout Johngreys sea canoe tours as well. me and wifey go yearly and split a week in Kata and a week in Phiphi, might got to Patong if friends come over but basically avoid it, tis a shit hole.
I always stay here,
http://www.boathousephuket.com/
yet to find a better hotel in the world! Head up for Sunset and Happy hour one night and go wtf aren't I staying here. :P