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Most of the restaurants along the oceanfront tourist zone are marginal. A favorite casual restaurant is Chuy's Place, which is one block west (on Mar de Cortez), near the north end of the zone. Favorite for breakfast is "Mi Casa Es Su Casa," which is a couple blocks south of the Circle, on the road that goes to the marina and airport. Favorite for a more formal experience is El Nido, also on Mar de Cortez, a couple blocks south of the Malecon.
The local "Birria" joints are great, and don't be afriad of the street stands either. They make great tacos, and you're not going to get sick as you might in some of the mainland areas of Mexico. Baja's pure spring water sources mean it doesn't share that problem.
On Hwy 5 coming into town there are a couple of nice restaurants. Jimmy's Beach Bar & Grill @ Playa de Oro (KM. 179) and The Pavillion at El Dorado Ranch (KM 178). Great food & entertainment. Mostly "Gringos" at both.