I went there for vacay last August and it was a lot of fun! We went waverunning, sunset sail, and snorkeling. You can find all this stuff down at the docks of downtown key west.
Night life wasn't bad, Fat Tuesday's rocks during happy hour with all their different slush mixes. You get hammered quick off of them.... Also went to an Irish pub out there on the main strip. Overall lots of fun.
One of the weaknesses of KW is their beaches... they suck. There was actually a bacterial alert (2 different types, one was FECAL) for 2 of them (and a couple in Marathon) because of all the runoff water, it comes right off the streets of KW. If you're going to go out in the water rent a boat or jet ski and go out and swim.
If it's warm enough, you definitely have to do snorkeling. We went to a place called Green something (Sanctuary?) and it was a protected coral reef. We saw 2 barracudas and a 6.5 foot nurse shark, scared the hell out of my step brother haha. Some really colorful species of fish to see though, leaves you in awe.