Hello Bryan,
Smathers Beach is pretty much it for Key West for ready shoreside launches. I would get a hold of Central Reservations down there to see what digs you can find for a reasonable rate.
http://www.keywestinfo.com/ The island is small, so as long as you are driving, it really isn't critical to be near the launch area unless you really want to be. You can even get around by bike, did that myself earlier in the year.
I used to stay at Fairfield Inn for not much but times have changed (went up about $200. per night, ouch!). Prices can get downright painful in season anymore. I've found good rates at small single story hotels within a few blocks of the south of Truman around Duval. See what the Florida KB Guide has to say about rideable wind directions at:
http://fksa.org/showthread.php?t=2278
The Kitehouse runs regular sea taxi out to the Key Flats rideable in winds from all directions. If you're going to drive all the way to KW, best to plan on time out in the Flats in all that butter, shallow warm water, no powerlines, smelly beach bottom, etc..
More at:
http://fksa.org/showthread.php?t=427
http://fksa.org/showthread.php?t=5358
http://fksa.org/showthread.php?t=4846
