Hi,
I've been to Hammamet in August for the last couple of years (as well as numerous other times!

). I have to say that I don't remember flies being too much of a bother at that time of year - it's usually later, around September that they get a bit pesky! Hammamet town does have a tendency to have lots of corners full of rubbish, sadly probably more down to the huge number of tourists than anything else
Les Citronniers is basic but relaxed and friendly. The main downside is that (unless it's changed) there's no aircon in the rooms. A good point is that the bar prices are good and the outside part of the bar is quite a nice place to sit for a drink.
I haven't actually stayed there so can't comment on the food and don't know anything about the entertainment there. If the evening ents programme isn't too great, the Hotel Fourati down the road is quite good. I went there several times last summer when I was staying at Le Hammamet (also in the same road).
Personally I love Hammamet and the majority of other tourists I've spoken to out there agree. Several, like me are repeat visitors, going back time after time. I've met very few who really hate the place - in fact off the top of my head I can only think of one!
Hope this reassures you a bit - I'm sure you'll have a fantastic time!
A.x