The gay area is located at Patong not in Phuket Town itself
http://www.gaypatong.com
The website gives a good flavour of gay activities in Patong

The gay area - about a couple of short streets are located about a block from the sea/beach and did escape damage last December (right at the edge of the affected area).

All the top hotels are located at the Laguna area which is about 20/30 minutes drive away with traffic and for the miracle of the geographic features of the area, totally escaped tsunami damage. There is a Sheraton here. The 2 Marriots are in Talang which is next to the Laguna area so about the same distance to Patong. The other Shearton hotel is located in Krabi which is south of the island. I think it will take about 20/30 minutes to get to Patong as well and this area was the centre of damage during the tsunami.

The Patong gay area is not for everyone. My b/f and I went there on Christmas eve last year one evening from our hotel in the Laguna area. One evening was enough and we were happy to leave Patong after a couple of hours and never to return. It was not us. If you are after "companionship" with the locals either at the bars or massage parlours and watch drag queens mime to madonna then you may wish to spend more time here.

Not sure what the gay scene is like in Bali. However, I would suggest Phuket for a great holiday if you are thinking about it and to help the local economy recover after the depressed tourist market this year.