We just got back from our sixth trip to Provo and we've stayed in 5 different resorts and seen the inside of rooms at another 4 different resorts (we just walk the beach and ask the front desk to see the inside of rooms if we think we may be interested in staying at the resort on a future trip). One thing I would say is that the level of resort on the island can vary a lot. I would not personally consider staying in some of the resorts recommended in this thread (older, tired resorts with most or all rooms NOT being oceanfront). Conversely, some of the resorts on the island are VERY high end and the rooms are 2x more expensive than what you can find at a comparable resort if you know where to look (book directly with the resort to take advantage of specials or look on VRBO.com).
As for diving, we dove with 3 different operators but used Caicos Adventures the most. Caicos Adventures is a first rate operation and we saw a TON of big fish out at West Caicos and French Cay. If you have some specific questions, feel free to PM me.