I haven't been to Key West in 2 years, but before then, my wife and I would go 2-3 times a year and we always stopped at a little outdoor restaurant called Caroline's, which is on the west side of Duval St. just south of the intersection with Caroline (just south of one of Hyatt's vacation properties I think).

It's very casual, but good salads and sandwiches, and a total bill of under $40 or $50 for two, including a couple of beers each or a little bit of wine.