Just returned from just over 2 weeks staying at this hotel, and it was absolutely fantastic.
We stayed in the cottages, which were excellent. The rooms within the hotel are more expensive and the only difference is that they are bigger. The cottages are more than big enough and have identical facilities, i.e. tv, dvd player, air con, fridge, etc. The bathrooms in the cottages are unique, in that they are partially open air. They are still private, and we had no problem with insects! The best bit about the cottages is that you can go to sleep listening to the sea, which is right on the doorstep.
The hotel generally is very clean and the staff very friendly and willing to help. They do not expect daily tips, as has been my experience at other all inclusive resorts, but you can expect to give tips to the staff towards the end of the holiday as a lump sum, as opposed to everyday. Having said that, when I say a lump sum, we are talking about 500 sri lankan rupees, which is about £3!
The food in the restaurant is excellent. There is a good variety, and the hotel has different theme evenings. We never had a bad meal and there was plenty of choice. There are 2 poolside bars which serve snacks at lunchtime if you don't want to go into the restaurant.
The worst bit about the hotel is definitely the evening entertainment. It can only be called "entertainment" in the loosest possible sense of the term. It is shocking. There are different things on every evening from the animation team but I can't recommend any of them. On the musical evenings the entertainers basically mime along to a backing track. The last bar closes at midnight, so I would say that this is not a hotel for those looking to stay up drinking into the night. There is a disco three nights a week but the drinks in there are not part of the all inclusive package.
We went on the one day trip to Kandy with First Choice. On the whole it was very good. We were a small group of 4 people so got personal service, and the guide was very knowledgeable. As with most tours, there was a bit of taking you to places to try and get you to buy stuff (e.g. jewellers) but there was no pressure to buy. I would recommend clarifying with the rep as to where exactly you'll be going, as there did seem to be some minor differences in peoples experiences. The elephant orphanage is amazing, as is Temple of the Tooth. If you get chance, go to the Millenium Elephant Foundation on the way to the orphanage, as you will get chance to support the charity by having a ride on an elephant (there is an extra cost involved).
Change some money at the airport if you can before going to the hotel - you get a better rate than at the hotel and it will give you some rupees to tip the porters on arrival.
As has been mentioned in other posts, Sangems the jewellers is very good. It is located just outside the hotel gates (there is a sign which you can see from the hotel). Take sterling notes to pay for jewellery and you will probably get a discount. The workshop makes up jewellery to your design within a matter of days and it is excellent quality, particularly the sapphires in various colours.
Overall, the best all inclusive hotel I have stayed in.