Anywhere on Seven Mile Beach in Grand Cayman. Great snorkeling from the beach. Great water sports from jet ski's to parasailing. The locals are extremely friendly and hospitable. I stayed at the Westin Casuarina on Seven Mile Beach and the service was excellent. Every morning and evening they put little personal rum cakes on your night stand. There is so much to do in Grand Cayman. They have a sub that takes you down on the reef and it is amazing. They have great restaurants as well. I would HIGHLY recommend Prime. It is a Brazilian Steakhouse. It is a great experience. What they do is, they give you a card that put on the green side, and they will continually come by and give you different meats like lamb, steak, and seafood. also a variety of sausages too. When your full you turn your card over and the food stops coming. The turtle farm is fun to visit with kids, but in my opinion, is a little boring after a while. There are a bunch of duty free shops in Georgetown that carry high end stuff like Miki moto pearls, rolex wathches, and Guy Harvey paintings. they also have more affordable stuff as well.
If I could only go and vacation at one caribbean island, It would be grand cayman hands down.
Hope this helps