Amalfi or Positano??

Either way you are on a winner. We stayed in Amalfi for 3 nights. Positano would tick all the boxes for you too. With a very healthy accommodation budget, maybe Positano?? It's like trying to decide who is your favourite child!!! The SITA bus runs the coast road between all the towns. We travelled to Positano by boat from Amalfi. Amazing coastal views en route.
Must visit towns - Artrani (just down the road from Amalfi) a little hidden gem with a choice of some first class restuarants. Ravello up in the mountains, one of my favourite places anywhere.

Positano would be my choice. It is restful yet has plenty of relaxing things to see and do, plenty of shopping and restaurants, and plenty of boat and ground tours. I would recommend my favorite hotel- Villa Tre Ville. It was once owned by the amazing Italian producer/director Franco Zeffirelli (his best was the 1968 Romeo and Juliet with Olivia Hussey and Leonard Whiting) and many celebrities enjoyed visiting him here. It is a relaxing and gorgeous oasis with stunning views and they have outdoor seating where you can enjoy delicious meals at their restaurant while gazing at the beauty of the area. You are close to the sea and can use their hotel boat transport to get to town. There are gorgeous gardens and the fresh fruit, veggies, and herbs served in the restaurant come from their own gardens. The rooms are huge and comfortable- you will feel pampered- with beautiful decor, wonderful beds,and large bathrooms with double sinks, showers and big tubs.Every time we have been there, we never wanted to leave. You can see it all at their website- www.villatreville.com You can walk to the beach.

We've stayed two times in Positano and once in Amalfi. They're both beautiful, and have worthwhile sites. My recollection of both towns was that Positano seemed to have more restaurants, shopping, a beach (pebbles and round stones) and both have the same public transportation (SITA bus). You've got a big hotel budget, but you could stay at La Tavalozza with Celeste and spend your $ on meals and shopping if you stay there. Both are very nice and worth 3 nights. Positano is not on an island (although I may have misunderstood your reference) and both towns are on the main road from Sorrento to Salerno. They're equally accessible. Hope this helps.

I'd go for Positano. $500 would be what I'd spend for the three nights but with your budget you could afford five star accommodations at Le Sirenuse. I don't think Laguna Beach compares to either. Not even close. I can't really compare them to anything I have seen in North America. By the way Catalina island is an island while Positano is on a peninsula.
Be aware Positano is steep. The locals don't say " vado a casa" (I'm going home) but rather " salgo a casa" (I climb home)

Thanks everyone for your input, suggestions, and ideas. Sounds like we can't go wrong with either city with transportation being available by bus, boat, or car from either Amalfi or Positano to all the great things to see and do on the Amalfi Coast. I will definitely look into the hotels and restaurants you suggested.

What I meant by the comparison to the two California cities had to more to do with the amount of traffic/congestion due to automobiles and tourists. Laguna City is very congested with both which is what I expect with Amalfi Town whereas Catalina Island is mostly on foot for tourists which is what is expected in Positano. It really wasn't mean to be a parallel comparison. I can't wait to experience Amalfi first-hand!!