Whilst Scilly is expensive (cost of goods is higher due to freight costs), it's an incredible destination - even in peak summer you can easily find a beach to yourself. It's also hard to comprehend you're in the UK on a sunny day. The one thing I would say is that the islands are consistently booked up - so choice of accommodation may be limited- there is an 'Isles of Scilly Late Availability' page on Facebook.
As you'll be aware you can fly fixed wing, helicopter or travel by ship (March - October). The ship is the most cost effective- but can be bumpy on a rough day. Take stugeron if you don't travel well, get on early & go right to the bottom berths & lie down.
This website is a good source of info on all islands:
www.visitislesofscilly.com
Personally I would definitely stay on one of the off islands for a true Scilly experience.
St Mary's, whilst lovely, is akin to a small Cornish town. If you did want to stay on st Mary's & are looking for a budget friendly option this place has been highly recommended to me:
www.longstonecafe.co.uk
St Mary's has the widest selection of restaurants, pubs etc - there's also a riding centre, and you can hire golf buggies to get around & see the whole island.
However, If you stay on an off island you can still island hop.
Tresco is a luxury private estate, essentially set up as a resort - you can fly in direct by helicopter. Accommodation is on the luxury end of the scale & prices reflect that. Tresco boat services operate for both Tresco & Bryher. Tresco has a pub & beachside restaurant - both expensive, London gastro prices. Tresco has the Abbey Gardens, which are stunning.
www.tresco.co.uk
Bryher is the smallest island, it has a well stocked shop, cafe, pub & upmarket hotel as well as good quality self catering. You can hire kayaks & small boats on Bryher if you want to explore the uninhabited islands too. They also have a wonderful seafood shop/ cafe.
bryher-islesofscilly.co.uk
St Martins arguably has the best beaches (Tresco are fantastic too). It has a hotel, pub, bakery, shop & 2 cafes. Walking on st Martin's is wonderful. Particularly the Daymark walk. Great Bay is the best beach in Scilly & never busy.
St Agnes is also wonderful- it has a pub, small cafe, shop & self catering options. Also a great campsite & ice cream farm.
All the islands are worth a visit, you'll find your favourite (mine is Bryher) - my advice is to book early (accommodation, restaurants etc) and take each day as it comes. School holidays are always busy - but because the islands have such limited capacity, they never feel overrun, you'll still find a beach or island to yourself. I would definitely book a wildlife safari tour (in a rib) - there are humpback whales & dolphins around the islands at the moment & it's a wonderful way to see a lot in a short space of time. Or hire a small boat & potter.
In my opinion there is nowhere better than Scilly. Enjoy!