Traffic can vary a lot based on time of year and day of the week and much of the overseas highway is still two lanes. It usually takes us 2.5 to 3 hours to get to Key West from Ft. lauderdale. The drive is beautiful.
There's stuff to do along the way to Key West, as well. Mostly diving, fishing or drinking related. Theatre of the Sea in Islamorada is fun, especially if you are traveling with kids. It's like going to Sea World in the 1950s. Very small but they have a lagoon with dolphins/dolphin shows. You can also do a dolphin swim. A seal and walrus show, trained birds, various tropical and water animals. Waaayyyyyyyy smaller and kitschier than Sea World but that's it's charm.
Key West itself has a LOT of things to do. Google "things to do in Key West". Like the rest of the Keys it's mostly about being on the water and/or drinking LOL.
The sunset party at Mallory Square every night is the best free show in town. The hippies started it sometime in the 70s. Basically everyone goes to the western side of the island and watches the sun set. it's evolved to have a lot of street type performers (a little walk down the pier to the Hyatt? where the guy with the trained cats performs is worth it). There are also all sorts of sunset cruises that will get you out on the water to watch the sunset. Little boats you can charter all to yourself all the way up to a big schooner (google Schooner Western Union) that serves wine and hors d oevres while you sail and shoots off their cannons in pretend fights with the other boats out there.
The Conch Tour train is cheesy and touristy but if you are a tourist it's a great way to get a tour of most of the island, a starter dose of Key West history and enough bad jokes to last you a while.
It's also a good way to figure out what else you might want to do. The main station is near Mallory Square.
Since you'll have a car, when you book your hotel room make sure there's a place to park it. The island is in two parts, "Old Town" is the historic district and it's where most of the cool stuff is. It can also be a nightmare to park there. If your hotel is on Old Town make sure they have some sort of parking. "New Town" is the rest of the island and they actually have parking lots. If your hotel is in new town park your car there and rent a bike or a
scooter or take a cab to the Old Town sights.
Nightlife is centered on Duval St. If you are not traveling with kids you can give the "Duval Crawl" a shot. That's starting at one end of Duval and having a drink in each bar along the way as you walk from the Gulf of Mexico to the Atlantic Ocean. We usually don't make it far before the lure of air conditioning and a band we like causes us to park in one bar or another.
I can't name them all but if you start from Mallory Square and head toward the Atlantic some interesting onese include:
- the World's Smallest Bar. Whole place is the size of a walk in closet. Great photo op and the last time we were there they were serving frou frou drinks in pineapples and coconuts. You can walk down the street with your drink as long as it's in a plastic cup (or pineapple/coconut) and you aren't too drunk and disorderly.
- Irish Kevin's is raucous and features a steady stream of guys playing guitar/singing to entertain the crowd and yell out to the people on the street. It's fun.
- Sloppy's has already been mentioned. It's the photo everyone has to have.
- Rick's is across the street, a little smaller and lower key. Depends on the band but we've always had a lot of fun there.
- there's a new dueling piano bar that I haven't been to yet.
- The Bull (first floor) the Whistle (second floor) and the Garden of Eden (rooftop bar) are all in the same building and it gets a little wilder the higher in the building you get. Culminates in the clothing optional Garden of Eden on the roof.
- Fat Tuesday's, Flying Monkeys and Lazy Gecko all have cold slushy drinks in the big spinning machines. Flying Monkeys has some awesome seats outdoors right on duval to people watch from.
- The Green Parrot is a block off Duval and a lot of fun but fair warning...no air conditioning. Can be a lot to handle if you're not used to the heat.
- there's TONS more bars
The 800 block of Duval has mostly gay bars. Like pretty much all of Key West, though, everyone is welcome. The Drag shows at Aqua and the 801 Cabaret are a HOOT. Not everyone's thing, though. Very adults only and have a stash of singles on you to tip. Bourbon St pub usualy has male strippers on the bar, you'll need singles for that, too.
Non-drinking activities:
- there are people on every corner tryng to sell you a water excursion. Fury and Sebago are the big ones and we've had great trips with both. Snorkel, sail, fish, dolphin watch, sunset cruise, parasail, jet ski you name it.
- The Martello museum is an old Fort that is now used to house pieces of Key West's past. It's most notable 'resident' is Robert the Doll. A hundred some year old doll that supposedly haunted. If you don't ask his permission before snapping a pic of him he is rumored to visit mischief on you. (google him, too, it's a much longer story.
- Down by mallory square there's the shipwreckers museum, a very very small aquarium, a museum/shop devoted to the Atocha shipwreck and the man who found it. You can even lift a big honkin' gold bar that was part of the treasure.
- There's a butterfly conservatory. haven't been yet but I want to go.
- The Hemingway house
- The cemetery. Yes, I just suggested you visit a cemetery on vacation.
It's interesting, though. Lots of history and humor amongst the headstones. The most sought after one for pictures or rubbings is the one that says "I told you I was sick". Last time we were there there was also a group of iguanas in residence that were fun to watch.
- there are walking and trolley ghost tours.
- Nancy's Secret Garden (another google) is a tropical garden. Nancy also has quite a few resued birds - big parrot, cockatiel types - that live there.
There's more stuff and I'm sure I'm forgetting lots of things. If you're lucky there will be some sort of event, festival, parade or street fair going on. They occur frequently.
Food! There are some amazing restaurants.
- I love Cuban food and there are many great options. El Meson de Pepe is down near Mallory square. Very good, cool location and if you hit the right night music and dancing.
- El Siboney is smaller, more local, nothing fancy but the food is really really good. Very reasonable, too.
- Several places attached to laundramats where you can get a cuban sandwich and a Cafe con leche. Yummmmmm!
- Blue Heaven is a carribean food restaurant. Very good food and cool set up. You'll probably eat outside and a chicken will likely walk by at some point during your meal. It's in the Bahama Village part of Old Town.
- Frozen, chocolate covered, key lime pie on a stick. Get some. (I like Kermit's but they're all good)
- Oh, Louie's Backyard. Awesome meal and you eat it on a deck overlooking the Atlantic. It's a nicer restaurant but in Key West you can dress pretty casually for anywhere.
- Antonia's has delicious Italian
- Sara Beth's is divine
- Upper Crust Pizza for pizza and China Garden for Chinese - both deliver and are reasonable
Like the bars there's TONS more restaurants.
You can definitely find something to do. Even if you just stroll the lanes of Old Town (or ride your bike or scooter). Beautiful place and most of the locals are awesome people. Have a great time!
***edited: I was so excited to start talking about Key West I zoned on the part of your post that said you would definitely have kids with you. LOL Just forget the bar part of this dissertation.
very, very expensive. 
