Here is our general judgement about Thai islands, and Phuket and Krabi/Ao Nang are no exception. Phuket island has some better spots for a traveller away from the main town, but it's generally full of mindless and soulless all-included/all-permitted kind of tourists among which the special prize goes to tourists from Russia. Phuket town is Amsterdam's Red Light District on steroids and probably one of the largest concentrations of Russians outside of post Soviet space. Places to stay in Phuket town are expensive and more affordable options are borderline disgusting. It really creates an impression of a Disneyland for tourists, especially those horny ones. The beach by the Phuket town is pretty dirty and the water is far from emerald as advertised.
We headed South to find some better deals. Couple of beaches down the coast from Phuket town are relatively nice, but of course the view of the beach and the sea gets ruined by ugly 5 star hotel blocks that all look and function the same way.
We reached almost the very South of the island and stayed at Rawai - small rather sleepy village. You can't really swim in Rawai, so to do that you'd need to get a collective bus (songthaew) to go a bit more North towards the earlier mentioned hotels. Going to the East of the island supposedly will get you to some fishing villages. We stayed at a very small guest house with a pool run by a German guy and his Thai wife and enjoyed it quite a lot, especially late night conversations among 3 of us (our best friend Ufoby and us) and with the owner who turned out to be a professional private sniper in Germany years ago. His stories about the sniper-hood and all sorts of nuances that come with the job went on and on and on. I mean, does anyone else know a sniper? :)
Krabi/Ao Nang is a bit better story. The town is located about 10km from the beach (Ao Nang beach), so you can choose to stay cheaper in the town and take songthaews to the beach, or stay in Ao Nang for a bit higher price and about 10 minutes away from the beach. Both options are fine. If you stay in the town the white songthaews (specific ones for Ao Nang) depart regularly from the very center of the town (ask for the crossroad where to wait for one) and you can rent scooters as well for about $6-8 a day. We did the scooters and were not disappointed - the road to Ao Nang beach from the town is marvelous - winding in between rock formations and fields, and doing it on your own on a scooter is really cool.
In Ao Nang walk around the main streets that go up from the beach and you'll find plenty of accommodation. We stayed in a basic room with shared bathroom and AC for $10 a night - places as cheap as these are not exactly looking like hotels, so look for signs on the street (our room was above a massage parlor, for example). The beach was usually crowded with tourists + had the same high/low tide problem as many other Thai islands, but we enjoyed it nevertheless with the help of water polo and tubing.
Ao Nang is also where we met our now good friends from St Petersburg - Misha and Katya who came to visit us this June in Lithuania with their 8 months old daughter who started her life in the belly right there, in Ao Nang.
There are plenty of more exclusive and beautiful islands in the gulf, but they would require a larger budget. With a good company Ao Nang is a pretty good and affordable place to stay.