Ko Tao, off the coast of Thailand, has beautiful beaches, warm water and weather and brilliant scuba diving. While a big tourist spot, it's not as packed as (I'm told) Ko Samui is. Visitors should remember that it's going to be much more expensive than many Thai locations though - the same goes for any of the popular islands, really.
Things to do: Scuba diving and snorkelling. I've been diving with New Way Diving, who have been absolutely great. Really friendly people running it, small classes and entertaining instructors. They're also willing to cut a good deal with their prices, unlike a lot of the places around here. There are many others around if you want to go somewhere else, however.
Chilling out on the beach (or not, with the sun over here) is also a good option. Get yourself a mat from somewhere and enjoy. Most of the beaches are very shallow, whith reefs just off the sand. Au Leuk is apparently good for swimming, and Hin Wong is also good, but has no beach, only boulders.
Places to eat: Coffee Boat, a.k.a. Mama's, next to New Way, serves big portions of decent food and incredibly cheap prices. Check out the deep fried no-name and the pad thai. They'll also deliver the food over to New Way if you want to eat over there.
Places to stay: I stayed at O-Chai 2, placed there randomly by New Way. The bungalows are reasonably nice, on the beach and far enough away from the bars that bass beats aren't a problem. Prices range from 200 to 400 baht a night, depending on season and demand.
No locations available.