I stayed at the Sheraton at Poipu beach on the south shore. Nice place but kind of spendy unless your on you honeymoon. There are a bunch of places to surf directly in front of the hotel. The south shore is fairly flat in the winter, but the reefs were decent even on the crappy windswell I surfed. If I went back and stayed on the south shore I would stay in Koloa. Still minutes from the beach but away from the resorts that cover Poipu.

On the north shore I stayed in Princeville in a condo. Next time I would stay in Hanalei. Many of the surf spots are in Hanalei bay. The condos in Princeville are cheap, and built around a golf course. It feels like you could be in any suburb in America. We could actually hear our neighbor breath while he slept at night in the condo. there were no curtains on the windows etc. etc.

Most of the population on Kauai I believe lives in Kapaa, and Lihue.

As far as whether to rent a condo with a kitchen or stay in a hotel and eat out. That is up to what you like. You won't be saving much $ by cooking yourself, as the groceries cost almost as much as the restaurant bill before tip. No joke 12 eggs cost about $7.50.