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I was going to say Pepe's too - it truly was our favorite place in Key West. GREAT food, super low prices, and really amazing margaritas! Fun crowd, too, more locals than your average Duval place.
Blue Heaven has wonderful food, menu is a little fancier than Pepe's, but for us it was a little expensive and there was always a really long wait. Worth the wait and the price for sure, but know what you're getting into.
We haven't been in a few years, but Turtle Kraals used to have excellent food too. Crab cakes with mango salsa stand out in my memory, yum yum.
Another one of our favorite haunts was Schooner Wharf, but in all honesty I can't remember what/if we ever ate there. Spent plenty of time at the bar though! So fun!!!
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