Well, we just returned from a trip to HHI as well, so here is my 2 cents:
We have been visiting HHI for the last 7 years - its one of our favourite places to vist. We have one daughter (now 10), and she has spent a week of almost every summer of her life at HH. Its a great family beach environment - good restaurants, great beaches, great resorts, lots of entertainment options and outdoor activities. We've never found it to be "snooty", but its not a cheap vacation destination. All that said, HHI
DVC may not be the best place to stay for a HHI vacation. As mentioned by Dean, there are better places to stay for that real beach atmosphere at HHI. My opinion is this - if you own DVC and want a break from Disney one year, HHI may be a good alternative. However, I wouldn't buy DVC to primarily use at HHI. The Marriott resorts are, in my opinion, better situated and nicer (at least Barony or Grande Ocean). Another alternative (which we usually do) is to rent a villa/condo/townhome in Palmetto Dunes, Sea Pines, or one of the other resort developments. We usually select units which are not right on the beach, but within a 2-3 minute walk (we can recommend Abington/Huntington in Palmetto Dunes, Turtle Lane Club in Sea Pines) and with a pool. Our normal routine is beach in the morning, pool in the afternoon/beach walks in evening. Having the beach within a short walk is a huge advantage to us (and literally makes the vacation for us).
On this trip, we had a few extra days on either end of our Sat-to-Sat villa stay so we opted to use some of our DVC points to try out the HHI DVC property. We found the accomodations very nice, certainly up to Disney standards (we own DVC at BCV where we usually stay, although we also very much like VWL). The property itself is fairly conveniently located, but for us, being so far from the beach is a real disadvantage. For a few days not a problem, but not for an entire week. The Beach House itself was nice, although the pool is a bit small. We stayed on 7/28 then 8/5. The pools were not very crowded, but we did notice that the pools were extremely warm (not very refreshing - especially the feature pool at the resort - anyone know why?). We did notice that the beach house access from the beach was not very secure - not sure if this was being exploited, but if you wanted to use the Disney beach pool, it wouldn't be hard to do. We also thought that it was a shame they shut down the pool slide so early - 5pm. We were told it was to keep costs down as they didn't want to employ lifeguards in the late afternoon/early evening. It would seem to be only a marginal cost, and 5pm in the summer comes awfully early - they should consider changing this.
As for lack of food options - we didn't see this as a problem at all. Heck, half the fun on HHI is trying out all the good restaurants and ice cream joints. A couple of our favourites - Rita's Italian Ice (wouldn't be an HHI trip without at least one stop), Signe's for breakfast/lunch, Sea Shack for lunch/dinner, Crazy Crab or Hudsons occasionally; we are split on Giussepes at Shelter Cover (I hate it but my wife and daughter love it).
So - its hard not to have fun on HHI no matter where you might stay. If you make it a regular destination, consider something closer to the beach than DVC. However if its just a break from WDW, the HHI DVC property is still a nice place to stay (you just have to work a little harder to work in the beach logistics).