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Here are tips from someone who just spent a blissed-out week on Grand Cayman and, because she wasn't inclined to do any cooking beyond tuna fish sandwiches, ate out at a lot of restaurants.
1. Don't refuse to eat at any restaurant that serves coconut-crusted shrimp. Because for some reason, all GC restaurants, even the cool, funky ones, are obsessed with coating their fish and shellfish with coconut or nuts or whatever else they can get their hands on. But definitely don't order it. (One major exception—the crispy mango shrimp at Calypso Grill, one of the handful of good restaurants on the Seven Mile Beach side of the island. The ratio of butter to every other ingredient is about 50 to 1 so of course it's delicious.)
2. Don't dismiss the blackened mahi mahi just because you had an inedible version wherever. Most places will judiciously spice and cook the fish, so that it's got great grill flavor but isn't incendiary. But when in doubt, always order the jerk fish over the blackened one.
3. Stay away from the mudslides (a trainwreck combo of Irish cream, coffee liqueur, vodka and ice cream plus whatever secret ingredient the restaurant feels like including). It's the national drink, or seems to be, and it's never a good idea.
And, inspired by Frank Bruni's recent “Restaurant Survivor” column in the New York Times, I played my own version while I was there. These three restaurants came out on top. (Note, this list doesn’t include the surely excellent Blue by Eric Ripert. The dollar exchange rate being what it is, I didn’t make it to the very pricey Blue. I guess I'll have to wait for Ripert to open a Cayman-based fish taco shack or burger stand.)
1. Over the Edge - On the North Side, near where I stayed, not far from the site of the upcoming Mandarin Oriental hotel. It's set right over Old Man Bay and they do very very good French Caribbean food, from shrimp in Pernod sauce with Cayman fry bread to wahoo escoveitch (fish fried and doused in a vinegary sauce) and striped bass with dill-butter sauce. It's a local hangout, locals also encompassing all the British and Aussie dive guys.
2. Lighthouse Restaurant - Also literally right over the water (their website has an alluring shot of your table's view), this is one of the "fancier" restaurants outside George Town. The menu is dominated by classics (i.e., dishes from 1992), but they're all well prepared. Tuna, with creamy mixed peppercorn sauce, is served exactly medium rare, or however you ordered it. The wine list is huge and annotated.
3. Calypso Grill - Another waterfront restaurant; every night, at least a few people come on their own little or big boats and dock next door at the picturesque Morgan's Harbor. The food is more Mediterranean than Caribbean and it's almost all good, although I'd advise against Morgan's Greek Salad, no matter how badly you want vegetables.