We just got back from a week in Corolla! We have always stayed in the north beaches (Southern Shores, Duck, Sanderling, Corolla), and love it. We use Twiddy Realty (twiddy.com) and stay in an oceanfront cottage - this year with a pool! It was awesome! Prices do vary dramatically, and are cheaper in the Nags Head area and if you're farther from water.
There IS a hotel now right where you come into Southern Shores - it's a Hilton Garden Inn, I think. The Sanderling Inn is not a chain and very posh. The Hampton Inn is farther north in Corolla. Keep in mind that if you're coming from the north, you're probably going to enter the Outer Banks at Southern Shores - so it's actually the shortest travel time even though Duck and Corolla are farther north on the map.
Things to do: we love Jockey's Ridge, and there's lots to do in the Manteo area if you're down that direction. Also the Outer Banks Music Showcase if you like clean family entertainment. You can rent kayaks, parasails, jet skis, etc. If you like horses and you're in Corolla, rent a jeep and drive in the 4x4 area to see the wild ponies. (we saw 24 in one morning! first time we've ever seen that many!) In the TimBukII shopping area there's bumper cars, paddle boats etc, and shopping for those who prefer it! Actually, there's lots of fun shopping in Duck as well.
Hope that helps! Oh, as far as food - most people go for seafood, which we don't like. If you're into gourmet, then there's LOTS to choose from. It's a little too pricey for our group. We like Tomato Patch and Sooey's BBQ in Corolla, Pizzazz pizza (several locations), etc.
Have fun!
And of course, the beach!