Steve,
Just came back from KW last week for Poker run/Bike week. As someone stated earlier there's nothing really cheap in the Keys, just some that are cheaper than others.
We stay at Marreero's B&B on Fleming nice converted KW mansion, only has 12 rooms...w/variuos sizes. $120-$200 per night depends on room size. Bananna bay resort has similiar prices...Pilot house...all are close to Duval st. Personally I would only stay North of Truman @Duval...walking is the best option usually, so staying south of Truman(closer to southern most point) would involve a longer walk to majority of the main attractions on Duval and Old Town.

As far as eats....everything is higher in the keys too. Expect to pay 25-30 bucks per meal (for 2) avg at a moderate sit down place...$8-$12 seems avg price per person. We would eat out once at a place like this...then grab a slice of pizza at "Big Un's" sports bar for lunch...slice & soda $5. Whole cheese pie was $12 Great Pizza when its fresh. Island Fries is reasonable too. Its a little stand next to alley to Hog'sBreath Saloon.
Other places to eat...
Harpoon Harry's at 632 Caroline st...GREEEEAAAAT Breakfast you can get a large portion of Biscuits and gravy for $5...my wife loves the Po' boy breakfast sandwich (biscuit topped with chicken fried steak and sausage gravy with egg)...which is so big its actually open faced and you eat it with a knife and fork. Harry's also has a great lunch menu. Other's...Turtle Krauls see the racing turtles (was closed for remodel last week though), Dante's if ya like seafood, or half shell next door is a good raw bar, but has other stuff too...Fohgarty's on Duval is nice we've had good experiences there, big portions..the outside frozen drink bar ("the flying Monkey") is a great place to people watch. Have a "Dirty Monkey" while there. If ya want a throw back to the days of the soda fountain shops there is "Matthesons Ice cream shop" there's one on Duval but the best experience is off of white st. 1110 White st I believe. Goood other menu too, with lots of variety.

Hope this helps...keep in mind that the time you'll be there will be just before or during Fantasy Fest...so places to stay(if ya can find on) will be charging higher seasonal rates.

 

Bump...

 

+1 on 27 to 997 very nice ride once you get past Sebring. You can also stop at the indian casino north of homestead on 997.

 

Decided not to do "west coast" of Fla. so we will be heading down straight from Charleston SC. Trying to make end of Biketoberfest maybe around 10-17 or 10-18.....

 

Best fish sandwich in KW is at BO's Fish Wagon on caroline st. it looks like a real dump, trust me it is thee best!

 

Best conch fritters in the world are at Alabama Jacks It is on Card Sound road as you come on to the overs seas hwy. Card Sound is on the left It takes you to Key largo a more scenic way.Look's like a dump as do all the good places in the key's. Best place to eat in Key west is Blue Haven don't be put off by the chickens running around the place. I Live in Okeechobee and as some one stated before there are a few way to ride through Florida and see the REAL FLORIDA and never hit a interstate or even a 4 lane hwy. I go to the keys every year and if you don't fish, dive, and have a boat it becomes boring after a few day's.If you don't spend time on the water you will not know what the key's are really about. Florida is a OK place to ride if you find the back roads.