If you're looking for a place like Puerto Vallarta, it doesn't exist in Costa Rica. Beach towns here are much smaller, with smaller selections of restaurants and shops.

The town of Flamingo, such as it is, is walkable. It has a couple of decent restaurants, but nothing that will provide you with a different dining experience every night you're there. If you're willing to take a taxi to nearby beach towns (Potrero, Brasilito, Tamarindo), you'd expand your dining options. They're not far from Flamingo. Your hotel can arrange for a taxi to take you there, and the restaurant can arrange for a taxi to take you back to Flamingo.

Yes. Hilton Papagayo puts you out in the middle of nowhere.