San Juan del Sur is indeed a much nicer place than the city of Managua. It's on the beach, 140 km. south of Managua, near the border with Costa Rica. I've always wanted to organize a conference in SJS, but for DebConf it's not an option.
SJS is far more expensive than Managua. An hotel room costs aprox. $50 per person per night. The hotels are much smaller than in Managua, most of them with barely 15-20 rooms. One of the exceptions is Villas de Palermo, with 50 'villas' and a total capacity for 250 people. It's one of the more expensive places; $60-85 per person per night. Villas de Palermo is a spa/resort, so there's no conference facilities in place.�
Another potential problem with SJS is connectivity. It would be difficult (and too expensive) to have a somewhat decent Internet connection.
Oh, and we don't have locals in SJS. Planning and logistics would be a nightmare for us (just travelling by bus MGA-SJS-MGA could take up to 5-6 hours).