No idea about lodging. My family owns a house on PIB so I've never had to worry about where to stay. I've been to Kelly's twice, but it's been about 8 years, so I have no clue about anything there, other than that I hear it' quiet and boring (and Put-in-Bay is pretty quiet during the week anyway).
For food I recommend Frosty's Pizza, Mossbacks, and the Boardwalk. The Boardwalk is great because you can get food ala carte downstairs, or eat in the restaurant upstairs with table service, tv's, and a great view of the harbor. Tippers also has some good buffets and other dinner deals daily. Food isn't fantastic but is decent and cheap. If you want to have an excellent dinner in a great setting with a good bottle of wine then Axel and Harry's is the place to eat. It's tucked away behind the Dairy Queen, but there's nothing better than eating dinner on their deck at sunset (although it is pricey).
http://www.frostys.com/
http://mossbacksatputinbay.com/
http://www.the-boardwalk.com/pdscms/
http://www.beerbarrelpib.com/Tippers/default.htm
http://axelandharrys.com/
Unfortunately the monument observation deck is still going to be closed all summer for repairs. It won't be opened until summer 2012.
http://www.nps.gov/pevi/index.htm
Unless you need to get to or from the island after 9:00pm take the Miller Ferry. The Miller is located on Catawba Island, has several free parking lots, and boats leaving every half hour. The boat ride itself is 18 minutes. Tickets are $13 round trip (the Jet cost more than that one way). The dock on PIB is about 1.25 miles from downtown, so it's an easy walk, even with a few rolling bags. If you don't want to walk you can take a bus or cab for about $3 a person. Even with the cab, taking the Miller is still half the cost of taking the Jet.
http://www.millerferry.com/
If you're staying downtown then everything is basically within walking distance. If you want to do much exploring outside of downtown then I would rent a golf cart or bikes for one day. Otherwise there isn't much to do outside of downtown. The winery and cave are outside of downtown, as is the state park with ruins of the old Victory Hotel. Perry's Cave is a great place to go with an excellent mini-golf course. There's an amusement center on the edge of downtown called Adventure Bay with go-carts and a pretty good arcade. There's also a crappy nine hole golf course on the island across from the state park, but it's still golf and it's cheap and they have club rental. I would also recommend taking in the historical museum behind the police station.
http://www.heinemanswinery.com/
http://www.perryscave.com/
http://www.adventureputinbay.com/
http://saunderscottages.com/
http://www.leihs.org/
If you need online and your B&B doesn't have free wifi you can get free wifi at the public library located in the bottom of the school building. Also, there's a South Bend Chocolate Company Chocolate Cafe located under The Goat between downtown and the caves. They have the best coffee on the island. If I'm on the island while you're there you'll find me in there every weekday morning from 9:00-noon enjoying the coffee and free wifi working on my computer.
When you get to the island grab a free guidebook and buy a copy of the PIB Gazette (I actually have a year round subscription). Both will have a good calendar and some insight on things to do and see while you're there. Here's the basic summer calendar. Each bar should list their entertainment schedule online.
http://www.putinbay.com/calendar.htm
I have always had a great time there with my wife and friends. It is funny to see the people being caught up in the excitement, get overserved, and see them passed out in various Public places. Not a "ha-ha" funny, just funny like you know it is going to happen. 
