I stayed at Sairee Sairee Guesthouse a few months back, and ate every meal at Sairee Sairee Restaurant. Everything was excellent, from the pastas, to the pizzas, and my absolute favorites were the profiteroles and chocolate cake. They make a fine cappuccino as well, and have a pretty great wine list! I went back to Koh Tao and stayed at a dive resort in the south of the island last month, and still made the trip to Sairee Beach just to eat at Sairee Sairee Restaurant. Bit pricey for Thai standards, but worth every penny! Amazing amazing place!
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