Well, a few things to know. Surfing at Playa Zicatela (the major beach at Puerto Escondido) is known the world over as the Mexican Pipeline. However, it is primarily for experts and is busy all the time. For this reason, some prefer to surf east of here near the town of Selina Cruz--or go to other surf areas in Mexico--for example Suyalita north of Puerto Vallarta, or the surfing beach near Mazatlan. I'd stay away from the surf beach in Baja California (too dangerous) or the one near Acapulco (too expensive, since this is a major tourist area).
If you go to Selina Cruz, the locals are quite friendly but also a little bit territorial, but I hear that's just because they smoke pot all day long. At Sayulita, the costs are super cheap (less than $15 USD per night, but there are only two hostels--and one of those is a real dive and the other one only has like 4 bedrooms available.
Hope this info helps.