My last time in Key West we rented out this place:
http://www.key-west-florida-accommod...ort-suite.html
It was Awesome. With our group it was kind of like the Real World house.
Check out the Bull & Whistle Bar (but not with your kids). It's overrated, but still worth having a drink there.
During the day you can go drink & use the pool at Dante's. It can be a fun time..