There are many very good restaurants in the small downtown area at the north end of the island, along Hidalgo Street and the waterfront as well. Loved Amigos, El Balcon, El Sol Dorado, Playa Sol, Poc Chuc, Cafe Cito, the Sunset Grille, and many others. There are many shops in the downtown area as well as street food vendors that are well worth the few pesos for a taste of Mexico that is much more native than the restaurants in the Cancun Hotel Zone. Walk the town streets and enjoy. There are beach palapa bars/restaurants on almost every beach. There is snorkeling available by boat rental, or at Garrafon Park or Hotel on the south end of the island.
We stayed at Playa Media Luna hotel - small on the caribbean side, and I would recommend it. They have a great staff and location on an almost private beach. Nice rooms and great ocean view from the balcony/hammocks provided. Nice small pool and breakfast.
There are iguanas all over the island, and although they look prehistoric scary, they are more scared of you than you are of them, and they seem to like mangoes, which you could buy from the street vendors. We liked them too - both the iguanas and the mangoes (try them with chili seasoning - the mangoes, not the iguanas!).
Quick Tips:
Eat at the local restaurants.
Try the food vendors in the Zocalo, the town square.
Walk North Beach and enjoy.
Enjoy a hammock and a cerveza at Playa Sol (beach palapa bar/restaurant with good food as well).
Snorkel at the Garrafon Hotel or park.
Take a trip to Isla Contoy, an island nature habitat day trip from Isla Mujeres.
Eat Tic N Xix (mayan fish dish) at Playa Lancheros mid-island.
Take the tour of the turtle farm/habitat.
Don't miss the sunset on North Beach.
Good local band music at Isla Tequila.
We had good experiences with friendly locals everywhere we went. FYI there are internet cafes all over downtown if you must check your e-mails and taunt, uh, I mean "touch" base with those not fortunate enough to be on the beach as well.
Best Way To Get Around:
From the Cancun airport, it is a 30 - 40 minute taxi or shuttle van trip to Puerto Juarez, where a 20 minute ferry ride will take you to Isla Mujeres, about five miles off the coast.
For more than a day stay, spend one day at least just walking the north beach and the streets of downtown. Rent a cart or moped and explore the south end and the carribean side of the island (easy to do, the island is only about five miles long and less than a mile wide).
Bus transportation around the island is also easy and inexpensive. The south end and the Caribbean side offer beautiful views and crashing waves, while the north beach offers beautiful sand and quieter waters for swimming and snorkeling.
Also drive through the Colonia - the mid-island area where most of the locals live. It's a great experience/slice of non-touristy Mexico.