I've gone twice in late August, and it was fantastic! That's when most of Europe is on vacation, so it's a hopping place. But I never found it too crowded. Thinking about Mykonos this summer for a change of scenery...

As for the beach, I've found that the...ahem...socializing doesn't take place on the main gay beach (in front of the Calipolis Hotel) as there's too much people traffic. Walk a bit further south, where the streets are much quieter. Crazy. Never seen anything like it. (Except for the woods by the nude beach outside of town, but that's another thread...) ^