I live here in Isla part time (also in Austin Texas) and I can tell you my favorites, as a part-time local:
FRENCH BISTRO- Excellent Caper Lime Fish, great balsamic on the salads, sweet plump shrimp and good yellow curry - Nice reasonable dinner sowntown, Victor the owner is very charming, as is Petey, the resident bird!
Angelos- Yummy fresh basic salad (ask for gorgonzola to kick it up) good pastas, good zuppa de mussels and pizzas are always good, thin and crispy.
Villa Rolandis (NOT DOWNTOWN-EXPENSIVE-LOCATED ON SAC BAJO) High end, great service, luxury setting- everything is good that I have tried, and a great wine list for the Island
Almar Lounge (high end-espensive) Very luxurious setting for drinks and ceviche and guac...
Casa Os- GREAT SUNSET PLACE!(high end-expensive) great margaritas and guac-key lime pie is yummy- I have always had good experiences here with the Casa O's Fish filet with sauteed with mushrooms
Rolandis (on Hidalgo, downtown) Fun people watching, great food, fish is good and pizzas are too, always a good choice
PICUS- GREAT Ceviche and whole fried fish for lunch. Micheladas are good too! (Casual)
LOLOMITAS( Cheap) If you like Pork Chops, this is my husbands favorite. Also the Beans and Sopa de Lima are fabulous. Very limited drinks so maybe bring your own if you have a preference and dont look for ambiance here.
JAX- Burgers on the corne, great for standard American fare if you want that!
Sunset Grill and Na Balam- beach lunches good both places, mainly because they are on the beach! Good mixed drinks
Breakfast- M&Js Cazuela (not open Monday) something different and yummy if you like eggs!
I cannot vouch for Pinguinos, sorry!
We were there for about a week a couple of months ago and the best food we had was from the taco stand outside the ferry landing (only in the afternoons). Also, taco stands set up in the evenings (more on weekends I hear) by the sport field in the next village down from the main village on the northern tip. (Possibly called Colonia Salinas.)
Also, there is a home-made ice cream shop run by a woman from Peru. I don't know what street unfortunately: it is about two blocks in and just on the southern edge of all the tourist shop mayhem. It's a tiny little place with a couple of vitrines of handmade jewelry. The ice cream is not cheap but it is great. The coffee kahlua was my favorite.
In general: we're low-budget street snackers typically and we didn't try any of the fancy tourist restaurants.
We were there for 8 days end of May/beginning of June and had the following experiences:
breakfast: WORTHWHILE--Aluxes Coffee House, Color de Verano, Elements of the Island, el Pueblito (all coffee house type places with great coffee, baked goods, fruit, yogurt)
AVOID--French Bistro (just not very good)
lunch: WORTHWHILE--Bally-Hoo and Picus on the beach near the docks (awesome seafood and great setting), Playa Lancheros (awesome tik-n-xic!!)
dinner: WORTHWHILE--Lounge al Mar (up-scale and one of only 3 "expensive" places on the island, fusion, INCREDIBLE setting), Angelo's (good Italian), Fayne's (very good basic), Viva Cuba Libre (GREAT Cuban), Rolandis (great Italian)
AVOID--La Malquerida (once again, just not very good)
snacks, etc.: la Copa del Mundo ice cream, another ice cream place on av. Madero around the corner from Rolandis was better, though.
We stayed at Posada del Mar and ate at their restaurant, Pinguinos, at least once for every meal and always had very good food. Plus, if you get a chair and umbrella on the beach across the street from them (which is much better than North Beach), you can get their drinks and food from Roger and Juan, 2 great guys.
We took our 5 yr old daughter and never had a problem finding something good for her.
At Rolandis and Angelos, they have a few nice and cheap bottles of Mexican wine; otherwise, the cervezas, the margaritas, and the mojitos are pretty universally good.
For more info on the restaurants, etc. on Isla, get the map ($8) from www.mapchick.com and, no, I have no financial interest in any of these places or the website; we just love Isla!
Have fun--it's a great place to relax!