If you're doing a strictly fishing trip you may be better off at a resort with dedicated guides so you get some of the better guides in the area. I ended up booking a guy through the resort and he didn't have top notch equipment (old tackle, no platform on his panga, just a stick for a push pole) but he made up for it with knowledge of the flats. He put me on a bunch of good sized tailing bones. I blew a bunch of shots but did land a few. I took my own gear and 8wts were plenty. If you want to chase permit or bigger tarpon you will want a 10wt. Take small flies (6 and 8) and air on the heavier side with your eyes (big bead chain and some lead). I tied too many light flies. White, tan/cream, and olive/brown all worked for me.
We poled by a guide with 3 guys on the boat blind casting a mud and catching the heck out of 8 inch bones. If you want quantity of fish you definitely have options for that too.
We stayed at a resort on the South side of town called Xanadu. Great staff, nice quiet location with not too many units, and more than adequate accommodations. It was quite a bit cheaper than some of the more well known places like Victoria house. I'd definitely stay here again if I came back.
Definitely stay somewhere that is oceanside because the breeze helps keep things cool. The lagoon side of the caye can get a little muggy.
The north side of the caye (North of the bride) seemed quieter but you have to pay a toll to cross the bridge and it seemed like there's way more restraunt choices south of the bridge.
Plenty to do in San Pedro / Ambergris. Get a golf cart and explore the town. Very easy to get around and plenty to see and do for a week. Lots of great restraunts to try (I don't think we had a bad meal all week).
Couple quick recs:
Hidden treasures (make a reservation)
Bluewater grill (good food)
Island dream tours sunset booze cruise
If you dive - Hol Chan over blue hole (second hand info)
Secrets beach - not a secret but still worth the long bumpy cart ride (have a few drinks before cruising up there)
Tropic air 15 minute flight instead of water taxi. (saw this rec on texags and definitely concur)