Sharm El Sheikh is a small paradise on the Sinai Peninsula. Located about 500 kilometers from Cairo, I made my way there 5 times so far in my three years living in Egypt. Definitively glitzier than Dahab, Sharm is still a good place to party, dive, and relax or climb Mt. Sinai which is about 2 hours away.
Na'ama Beach is the center of the tourist activities. Located just north of Sharm, this area is totally developed into a resort town. Most hotels at Na'ama Bay have their own, private beaches with comfortable amenities such as chairs, shades and many bars!!
Shark's Bay is a little bit further, but is also growing into a resort community with several diving centers. The coral in Shark’s bay is still very nice, but lots of damage is being done to the coral by uneducated tourists breaking or simply standing on the coral.

The diving in Ras Mohamed National Park, which is located about 20 km from Sharm is absolutely fantastic and it is THE BEST PLACE I ever dove in terms of coral formation. Huge fan corals, salad corals, hard corals, soft corals, you name it! The visibility is always above 25 meters.
Unfortunately, I find that not enough is being done by the Egyptian government to preserve this natural wonder. Mass tourism is a big problem, where literally thousands of inexperienced divers are allowed to dive in one of the best spots in the world.
You can see diving pictures of Near Garden, Middle Garden and Far Garden (Oct 6-10th 2006).