Stella,
This would be more appropriate on the Travel Forum, but since the string started here, here we go. Allow me to put my 2-cents-worth,
Diving and snorkeling. Northwest Bali (a part of Bali that not many people get to see), near the Bali Barat National Park, in a village called Pemuteran. Although I would think that its 3 hotels are booked solid at this time of the year, it's worth your checking it out. Taman Sari Bali Cottages, Pondok Sari, Taman Selini. (there are a few more, but they are expensive, and I wouldn't consider the one built, certainly illigally, inside the Park).
The diving and snorkeling are fabulous. There are 5 diving sites, easily accessible in few minutes, using the small local boats. Each hotel has a diving company on its premises, but I would recommend "Reef Seen" own by my Australian friend Chris Brown (I brought him there in 1992, when there was nothing there: no hotel, no dive center, just a two-bedroom homestay (since gone), and he never left). For the last 5-6 years, he has been "in" horses, of which he has about 25, at present. You can take rides into the Park (beats walking!), or on the beach.
You can also do dives from the shore, right in front of the hotels, and night dives.
Of course, there is also the dive at famed Menjangan (deer) Island, which unfortunately has somewhat deteriorated over the years, but it is still great. It can be access directly through one-and-a-half boat ride from Reef Seen, or by the road by a 20-min ride, plus a short boat ride.
There is trekking inside the Park. If you are of the rugged type, an all-day trekking in the Park allows you to experience a dry tropical forest (north part of the mountain) and a wet tropical forest (south). Plenty of wildlife, but like in the rest of Indonesia's forest, difficult to see (except for the monkeys, and barking deers).
You've been given good advice on Ubud. I would consider staying in the village of Nyuh Kuning, just on the other side of Monkey Forest. It's quiet, in the rice fields, plenty of space. Several very reasonable accommodations. I would recommend Garden View Bungalows : cheap and good. Beautiful garden, the "blue mango" pool is fabulous, and a wonderful, friendly staff.
Have a good stay.
