It's been several years since I have been to catalina but have many fond memories from the place.
I've typically been on a boat when there, but have stayed at the Atwater hotel a few times. Funky place, a bit run down but well located and reasonably priced. I know I stayed at the Hotel Metropole, but cant recall much about it (I think that was my bachelor party trip
)
For a nicer ($$) stay, the old Wrigley mansion is now a bed and breakfast called the Inn at Mt Ada. It's a bit of a walk outta town, but fantastic views.
Renting a golf cart for a half day is a good way to quickly see the town. The Botanical garden is worth the hike and the inland bus tour is a great way to see the "off limits" rural part of the island.
Antonios pizza is a stop I never miss when there and Armstrongs fish market has "hands down" the best swordfish to be had.
If you walk to the Northern tip of the town (North of the casino) there is a cool beach club where you can sit in the sand and have a drink, rent kayaks, snorkels etc.
The Catalina Chamber of Commerce used to be the best way to get info
http://http://www.catalinachamber.com/dining/index.asp
They keep a list of whats available. Saves you from calling all the hotels.
This site has a cool webcam to give you a feel of the lay of the town -
http://www.visitcatalinaisland.com/avalon/webcam2.php
If you didnt know, almost all of the island is private property (Catalina Island Conservacy). The town of Avalon, Two Harbors, and a few harbors only accesible by boat are all that the public can vists. The rest is being protected from humans
Have fun!