Scott - not to confuse you now that you've gotten lots of great advice but just thought I'd comment on our recent stay at Occ. Grand. We returned on July 3 after one week there. We were part of a group of 13 and we do like AI's (I know, a lot of people don't) so it suited us well. Our 2 kids were with us, including our 14 year old daughter who did her open water referral there.
As for the hotel ... no offense to all the fans of town ... that's just not what we like very much. We spent most of our time diving or relaxing. My daughter loves to shop and one day we drove into town but, frankly, I was ready to leave pretty quickly although I didn't mind sitting and having a beer while she looked around. Rather than going into town, we enjoy more going to the east side of the island and exploring a bit. I guess my point is that the importance of staying in or near town depends on what you like. Also, we had no complaints about the food at Occ. Grand.
As for the on-site dive op, Dive Palancar ... we looked into using a smaller dive op but decided it was more convenient to use DP. We had no significant complaints. Our daughter had very good instruction for her open water referral the first 2 days - we were on the same boat but headed different directions in the water. After that, we dove together which worked out just fine for her even though she was new - of course, I kept a pretty close eye on her! I was worried about being on a cattle boat but mostly it was just fine. Our last day was a bit crowded and we dove in one large group but even then it was OK. Other times if there were several people on the boat we split the groups up. We also enjoy meeting various people on the boats. We dove with several DM's over 6 days of diving but I liked them all. We almost always were asked "where do you want to go?" and then it was discussed among the group. We did repeat some sites because I do think they were reluctant to go too far but I think that is reasonable. Their schedule also worked well for us because you can pick and choose between the 4 daily dives they offer - most of the time we dove the 2nd morning dive then the afternoon which allowed us to spend more morning time with our 4 year old.
Congrats and have fun!