ronin said:
As for staying on the island, I thought it was pretty much a pit. Nothing there, nothing to do, stinking open sewers and ots of flies.
Depends on what you're looking for.
We spent a week with my family (wife and two teenage daughters at the time) on Cozumel in spring 2005. We really enjoyed it. Rented a house in the hotel zone north of town (San Miguel - only town on the island) and rented a car to get around (beat up old VW - probably could have done better with that). We're not big on hotels or all-inlcusvies - prefer our own space, dealing with local grocers, etc. There was a group of fortyish women in the house next door who were down from the midwest for a "girls week out" sort of thing. They seemed a fun bunch at least some of whom had been going there for years. I got the sense whhile there that there are a number of folks who love the place and go back all the time.
We snorkeled from shore at Chankanaab and couple of the "beach clubs" on the
sourtern end of the island. The beach clubs are small outdoor bar/restaurants/dive shops that let you set up camp for the day on their patio furniture, use their showers and bathrooms, etc., in exchange for buying your food and drinks from them. I thought the snorkeling was pretty good and easy to access on your own (but not packed with fish like Hanauma Bay on Oahu, for example, and no spectacular coral formations like I've only seen in National Geographic). Clear water - easy access from shore - some fish and some coral. We didn't dive, though dive operators and schools abound
and, as pointed by others, that seems to be Cozumel's claim to fame.
Parts of San Miguel are indeed run down, particularly as you move away from the front few blocks that cater to the
cruisers and other tourists. But we didn't encounter flies (perhaps that's a seasonal thing) or open sewers. It's not Disneyland, but the local conditions are local color. I never felt unsafe, enjoyed the place, and the people we dealt with were mostly very friendly and helpful if needed. Speaking some Spanish helps.
San Miguel is a town on it's own in addition to the cruise port/tourist trade. Most residents are not wealthy by any means. Many are probably quite poor by north american standards. Young kids bag groceries after school for tips, but no beggars or pushy street vendors, etc. (except perhaps for the time share guys, but a simple "no gracias" keeps them at bay). Overall it is a pretty low key place but there are shops, bars and restarants that cater to the tourist crowd, and there are many small independent businesses in addtion to the more franchised places that target the cruisers. The ocean side of the island is almost completely undeveloped - a few beach club/restaurants, no protected beaches, but a surprising amount of litter washed up on the beaches over there as they are not maintained.
An informative website that includes a discussion forum run by a resident expat is at cozumelmycozumel.com
I found it helpful for getting recommendations on housing, car and other general planning information.
Cozumel was hit pretty hard by hurricane a year or so ago. Not sure how well they've put things back together since.