If you want to mix with locals and experience a little more of Bahamian culture, choose a hotel in downtown Nassau. Its beaches are not dazzling; if you want to be beachfront on a gorgeous white strand, stay on Cable Beach or Paradise Island's Cabbage Beach. Reasons to stay in Nassau include proximity to shopping and affordability (although the cost of taxis to and from the better beaches can add up).
The plush Cable Beach and Paradise Island resorts are big and beautiful, glittering and splashy, and have the best beaches, but they can be overwhelming. In any case, these big, top-dollar properties generally have more amenities than you could possibly make use of, a selection of dining choices, and a full roster of sports and entertainment options. Stay in Cable Beach if you don't plan to visit Nassau or Paradise Island often; you need to take a cab, and the costs add up.