We were just in Belize at Christmas/ New Years. Actually we were in Caye Caulker, not San Pedro. If you are looking for upscale, then I understand Ambergris is a better choice, but we really liked Caye Caulker. I understand it's even more laid back than San Pedro.
As I said, we did not see ambergris, but you may be disappointed if you want beachfront. All the islands were formed by mangroves, so it is muddy and shallow. Waterfront yes... beachfront, not really although the shores are sandy. The snorkeling in Hol Chan, a short boat trip away, was pretty good - we saw a turtle, an eel, lots of colourful small fish, and an eagle ray in about 10-15' of water. If its calm, the snorkeling on the outside of the reef is spectacular... but you need the perfect conditions to get out there. We managed to get outside the reef when we were at Tobacco Caye and had the best snorkeling day I've ever had - the visibility was probably a few hundred feet.
For true beachfront you may want to head further south on the mainland to Hopkins - Jaguar Reef and Hamanasi are the higher end resorts if I recall correctly. We stayed at a small house near there. As nice as 10 days on the water seems, you may also want to consider heading inland for a few days to San Ignacio for caving and Mayan ruins. The caving is spectacular.
2012 X-14V (gone)