This question is right in my wheelhouse.
Stay at the La Concha (Crowne Plaza property) on Duval Street. Duval is the main drag in Key West. You DO want to stay downtown...trust me.
Hotel is within walking distance of everything. I do mean everything...except the airport.

You do NOT want to have a car...zero need...unless you want to leave town. Rent a scoot if you like and don't want to walk, but it is very walkable. Great food and bars. Please don't patronize a chain bar/restaurant whilst there. Soooooo many other places to enjoy. Do visit Jack Flat's (about a two minute walk from La Concha) and get a grouper sandwich. I don't even like fish and love these.
Hang out with the locals; they are very welcoming.
You do not want to 'dress up' whatsoever. I wore a tie for dinner on my first visit and almost had to fight my way out of the hotel. They made me take it off. I am serious.
In case you're wondering, I have never taken a gun to Key West. Have never seen a hint of violence...but you will see lotsa weird people.
Will follow up with more info a bit later...
Bon voyage!
Be safe.