Phi Phi islands are arguably among the best known landmarks of Thailand. At one point of time, what propelled them to fame was Caprio's movie "The Beach", which was shot in Maya Bay and its whereabouts. But you don't need a movie to be impressed by the Phi Phi islands.
The key question a traveller needs to ask is whether he/she wishes to opt for a day trip to Phi Phi from Phuket or Krabi, or chooses to stay overnight. To my mind, the latter is an easy choice and I will explain why.
Travelling to Phi Phi from Phuket costs about 500THB, and 450THB from Krabi. The Phuket ferry starts from Rassada pier which is close to old Phuket town but a fair distance from almost everywhere else. Therefore, it will take you about an hour to reach the pier. Thankfully, the ticket cost includes transfer from the hotel. The journey to Phi Phi from the pier takes another 2-3 hours depending on the seas. The long journey time from hotel door and back is one of the reasons why I recommend staying over at Phi Phi for the night. If you are traveling from Krabi, the ferry starts at Klong Jilad pier. This one is close to the town and I felt visiting Phi Phi from Krabi more sense (the journey time is also shorter at ~2 hours), although the ferries from Krabi are mostly dilapidated and unwelcoming.
The highlight at Phi Phi is a little island close by called Ko Phi Phi Lee, where the Pi Leh lagoon, Viking caves and Maya bay are situated. As it is part of a National Park, the best you can do is a day trip on a longtail boat after paying an entrance fee of 400THB. Children younger than 10 years need to pay half the price. Most agents offer a full- or half-day snorkeling trip that covers Ko Phi Phi Lee with monkey island or bamboo island, with an option to stay longer and watch the sunset. The key attraction of staying till sunset is an opportunity to spot glowing plankton, but the experience is underwhelming. What you will probably see is equivalent to catching a glimpse of a couple of fireflies in a dark garden. The trip costs about 400THB per person including snorkels and minor snacks, and if you are a group of four people or more, you can hire a longtail boat by yourself for about 1,500THB (plus the National Park fee). Going with a group seems more fun though. Our boat was called "Freedom Team 9" or something like that, and I will highly recommend the guide/pilot. You can probably seek him out yourself at the longtail parking close to the Patcharee bakery and negotiate.
The Pi Leh lagoon does not offer much in terms of snorkeling, but it is an excellent place for a relaxed swim. And of course, it's beautiful. The Maya bay beach is nothing outstanding, but if venturing a little deeper into the island, you will come across unspoilt tropical jungle straight out of an adventure book.
To commute within the island, rely on walking. If you are staying at Ton Sai, you wouldn't have a problem at all. If you choose to stay at some of the more luxurious resorts at other parts of the island, you will need to rely on longtail boats, which will not be available throughout the day. While Phi Phi Don is a small island, the roads are quite confusing, with multiple ones running parallel to each other. I ended up walking more than I should have.
While Phi Phi markets close down at about 8pm-9pm, the island has a vibrant nightlife that can go unnoticed. After 9pm or so, just move to the part of the island opposite to Ton Sai pier and seek out the Ibiza party. You will be able to spot it because of the fire throwers and their antics. If that is not to your taste, the pubs around Ibiza are also bustling with action. Just walk towards the Dubliner Irish Pub and you will find plenty of options. You are also likely to come across vendors selling alcohol buckets at attractive prices in case you wish to go prepared. This is the second reason why I recommend staying overnight at Phi Phi.
For an early riser, I would recommend taking a stroll around the island in the morning hours. You can carry across a snorkel, some snacks and a bottle of water. There are no proper roads so will you need to do a bit of climbing. The general direction will be towards the Viking beach and onwards, and it is easy to cover most of the island given the short distances. The white sand beaches are a pleasure to walk on barefoot if you get tired.
One of the best places to eat in Phi Phi is the Patcharee French Bakery. The only downside is that it is a bit expensive and serving size for some of the items is inadequate. Some of the fancier places near and beyond the Banyan Villa have prices only marginally higher than the cheap eateries, so I would recommend having your dinner there. The Pad Thai is generally the best bet in case you wish to save money, but other standard fare like prawns with rice also cost around 80THB.
To stay in Phi Phi, you can either choose cheaper hotels such as the Panmanee or P2 Wood Loft, or 4-star ones like Banyan Villa and CoCo Beach Resort. It is not an easy choice to make but this is what I recommend. If you are staying for just one night, go for the cheaper hotels as most of the time would be spent at Phi Phi Lee and the night party. You would probably check out early next morning so doesn't make sense to pay just for the bed. For a longer stay of 2-3 days, the CoCo Beach Resort seems like a great but expensive choice. The Banyan Villa is somewhere in-between. I do not recommend staying too far from the Ton Sai Bay.
One of the problems with Phi Phi is that it is getting too popular for its own good. There is now a McDonalds just outside the Ton Sai pier. I don't want to be promised a faraway paradise just to see a global burger joint peering over my shoulder. This picture from the CoCo Beach Resort website gives you a fair idea of what is going wrong with Phi Phi. Just too many buildings and crowded streets. Despite that, what still works in Phi Phi's favour is that most of the crowd goes back to Phuket/Krabi after 4pm or so. The evenings, therefore, are still blissful.