Hi Li-sa, I wasn't going to answer your post as I thought someone who knew about the top half of the Costa de la Luz might come along to help but seeing as they haven't, I'll try to offer what help I can but please bear in mind that
my personal experience of the area is confined to the Cadiz province which is the bottom half and a long drive from Faro so not really relevant to you.

Having said that I think Isla Canela sounds like the sort of place you're looking for. There seems to be a choice of lovely apartments available on the holiday rental sites, an example is http://www.ownersdirect.co.uk/spain/S5386.htm

Contacting the owners or looking at their own websites will probably get you more detailed information.

The area is quiet but has fantastic beaches and having driven up that way myself last year, I can say it is within very easy reach of Faro airport with good roads which seemed quiet even in the height of the summer holidays so hiring a car might be a good option for transfers and getting around.

One thing I did notice was a very large urbanisation called Costa Esuri. It is located a little inland and looked like a building site to me last summer. Judging by the size of it, I would think that it will be along time before it's finished so I'd bear that in mind if you come across any properties for rent there whilst you're looking around.