Hi Littleman! My Husband and I were in Destin for 9 days in February. You are right - it continues to change. Beach Walk Cafe is gone, but Chef Tim Creehan re-opened in March at Henderson Park Inn off Scenic U.S. Highway 98. Can't say how it is.
The first part of my photo-report on our dining this trip is here: http://funplayingwithfood.blogspot.com/2009/02/more-fun-playing-with-food-in-destin-fl.html. Part 2 is here: http://funplayingwithfood.blogspot.com/2009/02/more-fun-playing-with-food-in-destin-fl_25.html.
Also -our 2008 trip is here: http://funplayingwithfood.blogspot.com/2008/03/fun-playing-with-food-in-destin-florida.html.
For fine dining in Destin proper, I'm thinking you'd like the new Commander's Palace. We spent some time with Sous Chef Thomas Finch, and he is passionate about his food, which we enjoyed. Criolla's is also gone.
Honestly, we've haven't done any other "fine dining" in Destin proper that I'd recommend - Destin Chops has moved way down 30A, and I cannot recommend Marina Cafe, based on our 2007 experience (http://forums.egullet.org/index.php?showtopic=99578&view=findpost&p=1366911).
However, if you are willing to trundle down to 30A, there are some wonderful choices. Our top choice is Cafe Tango. Followed closely by Stinky's Fish Camp - which is not quite fine dining, but Lake Place ought to be (a "sister" and brand new/old restaurant - the original burned down several years ago). As noted, Destin Chops is also down there. And I'd highly recommed La Botana - which isn't traditional fine dining, but which is a very classy and tasty joint - again, a fair distance down 30A from from Destin. Gravel Road also gets high marks. We enjoyed some sushi at Basmati's in 2008 and everyone looked like they were really enjoying their food.
Between 98 and 30A, Fire was terrific when we visited in 2008, and it now has a full liquor license, I believe.
As an FYI - Callahan's and Kenny D's both went back on our list this year after being banished for a while - they aren't fine dining, but provided tasty, fresh and satisfying food. Camille's is a favorite, but seemed to be closed; don't know if it reopened for the "in" season.
Also, across the street from where the 331 Cafe used to be is Senor Mojitos - we had a fun and tasty happy hour there; it might be worth a visit.
Finally, you might want to bookmark and periodically review this site: http://www.sowal.com/bb/dining-food/ - a lot of locals post there.