The vacation teetered between skiing in Utah and scuba diving in Yucatan - a painful dilemma resolved by the timely devaluation of the Mexican peso. Divers not only can "do it deeper," as the bumper stickers attest. This year on the Mexican coast they can also do it cheaper.

And so it was Cozumel, a 30-mile-long oval of jungle-tipped coral off the Yucatan coast, four hours and $265 (round trip) by jet from Washington. There, where the Gulf of Mexico meets the Caribbean Sea, lies the Palancar Beef - an underwater Oz of eoral caves and castles and parrot fish that smile.

I first had heard of Cozumel about six years ago when a friend put in there bridfly during a sailfishing expedition in the Gulf. "There's nothing there," she said. At first glance I thought she was right.

The jungle - low, impenetrable and rife with iguanas - broods over most of the island, largely unchallenged by man. The island population of 5,000 lies crowded into the village of San Miguel, a collection of potholed dirt streets, decaying frame houses and fading concrete. The single paved road around the island shows mostly more jungle and a few tiny beaches fringed with coral and coconut palms.

But the riches of Cozumel lie, like the smiling parrot fish, beneath the surface. Visibility in the crystalline waters ranges up to 200 feet, multicolored sponges people the reefs at every depth, and beautiful swimmers, from lacy golden angelfish to 30-pound emerald groupers to dime-sized small try of electric blue, glide among the coral towers like a living kaleidoscope.

"How was it?" I asked a burley 18-year-old Texan who had bummed his way with his buddies from El Paso for his first dive on the Palancar.

"Friend," he sighed, dreamily, "it was a religious experience."

If diving is the major attraction at Cozumel, it is not the only one. Passengers from the cruise ships, which anchor briefly almost daily in the harbor of San Miguel, throng ashore to the harborside boutiques for black coral jewelry, bright cotton fashions and tequila at $1.50 a quart. And in the sumptuous larger hotels, the Cozumel Carible and the El Presidente, single people and young families loll on chaise lounges under the palm trees, sip rum and just let the world go away.

But the best of Cozumel, we found lies in the town itself, which cheerfully maintains its own identity in the face of increasing tourism. There, in a laid-back community of tiny hotels and sidewalk restaurants, you can trade quips with a local waiter who taught the ancient Mayan language at Harvard, lunch on venison tacos and Yucatecan beer, or linger - like everybody else does - to watch the evening paseo of strollers on the village square.

The sort of uncompromising peace made with tourism by the people of Cozumel is evident at Casa Dennis, the town's best restaurant, which consists of a couple of oilcloth-covered tables in Dennis' back yard. There, provided you make reservations and have a group of at least four, you can sit under a 100-year-old Mamey tree, chat with Dennis' 5-year-old grandson and his dog, and eat such Mayan delicacies as cochinita de pibil - paprika-dusted pork baked in banana leaves.

A five-course dinner at Casa Dennis (you eat whatever they're serving) may cost you $5 a person, including beer or wine and tip. That's providing you can find the place by spotting the handpainted, index-card-sized board that serves as a sign.

Just as Dennis' family operated restaurant is part of the fun of Cozumel, the island's small, family run hotels are usually both cheaper and more entertaining. We liked the island better as soon as we moved from the Cantarell, a friendly but aging hulk of lime-green concrete south of town, to the Vista del Mar, a tiny, white-walled jewel of a place where $12 a day buys two people a cheeful, airy room overlooking the harbor.

From there we could wander over to Pepe's, a sidewalk cafe of unbrellas and palm trees which is Cozumel's de facto community center, to talk to the divers and breakfast on huevos motulenos - two fried eggs covered with chopped up ham, cheese, chili peppers, tomatoes and (for some reason) green peas atop a crisp tortilla garnished with refried beans and fried bananas.

The underwater world of Cozumel is so much a part of the island that any visitor cheats himself by not sampling it. Despite its somewhat hairy-chested image, scuba diving is a gentle sport easily sampled by anyone really at home in and under the water.Instruction is excellent at Cozumel. One member of our party, leery at first of diving, took a day's lesson for $18, which included all equipment. After five hours of patient instruction she was 20 feet down off the beach of the El residente feeding sea urchins to angel fish - not ready for the Palancar, but happy to have sampled some of the delights of diving and ready to contemplate a formal certification course when she got home.

I had made a few dives but got a check-out equivalent to a full instruction course plus a preliminary dive on Paradise Reef, a small but spectacular underwater garden just off the El Presidente. Then I was ready for Palancar.

The big reefs lie toward the south end of Cozumel on the Yucatan side of the island. There also lie the island's best beaches, broad and sugar-fine and fringed with palms, hard to find by land but easily accessible by boat. The dive boats go out about 10 a.m. for the hour's ride to the reef. Each diver uses up one tank on a deep dive of around 100 feet, than another on a shallower dive of around 50 feet.Then they hit the beach for an incredible lunch of fresh conch ceviche, fried grouper, sliced pineapple and all the beer you can drink.

That's all included in the $20 fee, plus all equipment.

The water, electric blue in the morning sun, was so clear we could see the edge of the reef as we anchored above it. Orlando, our Mexican divemaster with the bronzed self-assurance of a Greek sponge fisherman, led us over the side and we slowly floated down to the edge of the cliff.

There was the Palancar, great towering heads of coral falling sharply from the white sand floor 30 feet below the boat to the channel bottom more than 1,000 feet below in the eerie blue haze. Over the edge we went, snaking through coral valleys where pink sea anenomes waved ghostly tentacles and huge groupers peeked from hidden cavee. Tiny yellow fish, like grains of gold dust, poured forth from the hollows of purple sponges and a lacy white flounder fluttered away, a doily on the move.

Though the waters off the Yucatan coast are infamous as shark breeding grounds, sharks are seldom a problem on Cozumel. They range mostly on the eastern side of the island, away from the hotels and the best diving sites. But barracudas - eerie and curious but rarely dangerous - are omnipresent. At night you can stand on the sea wall of the Cantarell Hotel and watch them feeding in the flood-lit swimming area - three and four-foot arrows, half a dozen at a time, hanging motionless until something moves.

Down we went, in and out of caves and crevices, our bubbles curtains in the blue, until Orlando stopped and checked his depth gauge: 125 feet. We were hovering on the edge of danger. Below 100 feet diving is an exacting pursuit with a dozen fatal traps for the unwary. Nitrogen narcosis, the "rapture of the deep," can lead a depth-drunk diver to cut his own air hose, thinking it an inconvenience. But there is no sense of depth: The water is so clear there is no darkness, only a gradually deepening blue below. It would be easy to follow the schools of ghostly white fish fading among the jagged towers below.

But we rose, wandering slowly up the face of the reef. Orlando darted into a crevice with a fishook-tipped pole and emerged with a mammoth crab the size of a dinner platter. A dividend for lunch. Back on the beach, as crab and grouper cooked on the fire, I sipped tequila, lime juice and salt and wondered how soon I'd be back.

Ringle is a reporter for the Metro section of The Washington Post.