The beach at Fort Zachary Taylor State Park (300 Truman Ave., 8 a.m.–sunset daily, $3.50) is certainly the best in Key West [1], but none of the beaches on the island are particularly noteworthy. South Beach (southern end of Duval St.) is far less glamorous than its name implies; the tiny spit of sand can smell like sewage at high tide.
A better option close to Old Town is Higgs Beach (Atlantic Blvd. at White St.), which is also home to the Key West AIDS Memorial. Although the beach itself is nice and the picnic and park facilities are pleasant, there is a tendency for panhandlers to congregate, so be aware of your surroundings.
Smathers Beach (S. Roosevelt Blvd.) is by far the most popular beach in Key West [1], and it’s also the most crowded. Again, compared to some of Florida [2]’s other beaches, Smathers is small and unimpressive, but considering the dearth of options in Key West [1], it’s a decent enough alternative for those looking for quick access to sand and sea.
Links:
[1] http://www.moon.com/destinations/florida/florida-keys/key-west
[2] http://www.moon.com/destinations/florida