Actually Margaritaville is in the 500 block of Duval so it is five blocks from the dock. It is a 10-15 minute walk depending on how fast you are going. Definetly doable. We stayed in the La Concha Crown Plaza a couple of years back (400 blk Duval) and got blisters from all the walking back & forth to Mallory Square. But we did it several times/day.
Sloppy Joes is fun too, but no food. Slightly rougher crowd at the Hog's. I agree with PP about Blue Heaven though that is not walking distance. They have an awesome breakfast (seafood eggs benedict...pecan pancakes...fresh squeezed mimosa's!) And the atmosphere too. Its on Thomas ST....quite a bit south and east of the main drag. Kindof towards the southernmost point (which is also not really within walking distance). If you want some "real" key west food that is in walking distance, I'd have to recommend BO's fishwagon, it's right near the seafront on Caroline st. (Parrotheads? There's woman going crazy there

) It is quite the dive.....centerpiece is a rusty 1950's era Ford Pickup truck...but omg the grouper sandwich?? Melt in your mouth!
Margaritaville KW's menu was quite a disspointment last time we were there. They had dumbed it down unbelievably. Great atmosphere though. It's about 1/5 the size of the one in Orlando....and is more "real key west" (you won't find any exploding margarita volcanoes here!).
If you've never been.....you really should ride the conch train. Lots of fun, and great history and info too. We used to spend weeks at a time down there several times per year back in the 70's..and since we were on a budget, my dad used to drive around behind the conch train with the windows down listening to the narration! What a hoot! But if you ride the train before you head out walking you will be more familiar with the locations of the places you want to see.
And obviously if you've spent ANY time on this board you know about the choclate covered key lime pie on a stick. DON"T MISS IT!!!!!
Have a wonderful cruise!