As others have said beaches in Key West (and most of the Keys) are not what people usually think of when they think "beach". I'd take that out of your equation completely. KW will have any type of accommodation imaginable, depending on what your party looks like and what you want to do. If you're adults who want nightlife, stay close to Duval St, especially the western end. If you've got kids or just prefer something more sedate, look for something off Duval and further east, IMO.