On a recent trip to Otranto I can recommend the following...
2 restaurants which deserve a mention.
La Bella Idrusa 0836 801475. Right outside the walls of Centro Storico this Pizzeria does not make pasta but rather Antipasto (fresh calamari etc) and Pizza (5-7 euro). Excellent value, if you eat a pizza you dont need a starter!
La Pignata 0836 801284. Quality restaurant with medals of merit which is situated within the Centro Storico.
Don't be put off by the Medals of Merit and the beautiful setting - the owners are really nice and dont mind if you come in and just have one course and I didnt consider it to be expensive. I was travelling alone and didnt feel out of place but it is also quite a romantic place and there were numerous couples eating. The most expensive pasta (scallops and red shrimp) was 15 euro and fillet steak with mushrooms 13 euros. As I was on a budget I didnt want to do the normal 3 courses, I decided to try the pasta on the first evening with a glass of local Rose - it was very very good and the wine absolutely lovely, dry and not too sweet, it went perfectly with the pasta. It was so good I went back the second evening and had the fillet steak with mushrooms with another local red wine - this is the kind if food you would expect in a very expensive restaurant in London. What a great meal!