BJ
I live only blocks away from the Setai so here's my 2 cents:

Victor Hotel
http://hotelvictorsouthbeach.com/hotelvictor_1024.html
right on Ocean Drive where no local ever goes, though

Shore Club
http://www.shoreclub.com/
nice action, very good restaurants

Delano Hotel
http://www.delano-hotel.com/
the first 'hip' place and still going strong, kind of a classic, great pool

Raleigh Hotel
http://www.raleighhotel.com/
great pool

above is probably in descending order in terms of standard. Shore Club, Delano and Raleigh are close to Setai, all beachfront.

Have fun!