North or south?

Getting to the north takes time, and you would need to plan accordingly. I have not been, but hear great things.

Most people enjoy Granada a night, Ometepe 2-4 nights, if possible, Leon.

I am going to assume you mean Granada and Ometepe when you say south and Leon and the northern highlands when you say north. Both make for a great trip. And with a week you could even combine the two (if you have 7 full days).

For adventurous activities and street food you can't go wrong with Leon. It is also a great colonial city. The street food behind the cathedral is delicious. Also check out the market. Near Leon you can climb Cerro Negro. It is not hard, great views, active crater and you can board (or run) down. I also recommend the overnight Telica trek. Telica recently erupted and since the eruption you can't see lava any more but the views are amazing, sunset and especially sunrise are spectacular and the steaming crater is really impressive. It is a longer hike up, not that hard but hot. There are also late afternoon/evening tours. Near Leon is Las Penitas, a fishing village with a nice beach, fun waves and a nature reserve where you can go kayaking. It is not too far from Leon to Esteli and from there to the Somoto Canyon where you can float, swim, tube, jump off cliffs... El Tisey near Esteli is a nature reserve with a waterfall where you can see many birds. If you make it to Matagalpa you can hike up Cerro Apante and you can visit Selva Negra for cloud forest, trails and wildlife (many birds, but also monkeys, maybe agoutis...).

Granada is a pretty colonial city. The main sights can be seen in a few hours and you can go kayaking or take a boat trip through the isletas (many birds). Possible day trips : volcano Mombacho with cloud forest, trails and wildlife (birds, monkeys and if you are lucky a sloth). Active volcano Masaya (they drive you right up to the steaming crater). Lake Apoyo for swimming and kayaking. Ometepe Island is amazing. The two volcanoes are very different, one active, one covered in cloud forest. Both very hard climbs. You can see birds, monkeys on Maderas and maybe on the Concepcion hike as well. Charco Verde is a nature reserve with a nature trail and wildlife (birds, monkeys...) and a nice beach. Next door is Chico Largo Adventure : fun ziplining (two enthusiastic local guys), nice views, monkeys... Ojo de Agua is a pretty natural spring pool (birds, monkeys, iguanas). You can hike to the San Ramon waterfall (we saw monkeys there too) and you can go kayaking on the Rio Istian (birds, turtles, maybe a caiman, maybe monkeys...). There is also horseback riding.

So either Granada with a few day trips and Ometepe.

Or Leon with a volcano and maybe a day at the beach and Esteli-Matagalpa.

Or Leon and Ometepe (with a stroll through Granada).

Thanks for the great info. Somoto canyon sounds like something we'd definitely be interested but it seems way out of the way. Does anyone have first hand experience there? Is it worth the trip out there?
I'm I right to assume that Ometpe is very quiet at night, not much going on?
I was thinking of hitting SJDS but not so much now after reading some posts this forum. We wanted to do some surfing too but I guess we could find that up north. Is there any decent snorkeling around on the pacific side?

Somoto Canyon does take time to get to. You can do it as a day trip from Esteli. A bus to Somoto takes 2 hours and then a short bus or taxi ride to the canyon. Tours can be booked in Esteli but you can also wait till you are there. Our friends went and they liked it (before you ask : I did everything mentioned in my other post except for Somoto and kayaking + horseback riding on Ometepe, I mentioned Somoto because you like adventure). Read a few trip reports. If you want to do it, you would focus on Leon, Somoto, maybe El Tisey and go on to Matagalpa. Matagalpa is known for hiking and rafting. I did go hiking but I did not go rafting. Check out : http://matagalpatours.com/rafting

But with only a week (and I am not even sure if you have 7 full days) I would focus on Leon and Ometepe. It takes about 5 hours from Leon to San Jorge where you would take the boat/ferry to Ometepe. In Leon : the city, Cerro Negro, maybe Telica, Las Penitas for surfing (there is a surf school there) and on Ometepe a volcano climb and/or waterfall hike, swimming, wildlife, ziplining, kayaking...

Ometepe is quiet at night, Leon has lots of restaurants and nightlife.

SJDS is a party town and does not have the best beach. For surfing you would need to commute to the beaches north and south of SJDS or stay at those beaches but not many amenities. I think there are many more exciting places in Nicaragua.

No snorkeling on the pacific side.

With 7 days I would stick with Leon, 2 nights and maybe Jiquilillo or Las Peñitas for a beach and surfing. Padre Ramos is a good place for a day of kayaking and wildlife. Light Leon has some good nightlife, not sure about Las Peñitas, Jiquilillo you have to make your own party with other travelers.

Finish off with 2-3 nights on Ometepe, think you guys would get bored in Granada but does make a good first or last stop for a flight.

Good call on SJDS.

Of course you can't do snorkeling on the pacific ocean. The surf everywhere prevents that. Surfing is the thing to do. You can do that in Las Penitas, 1/2 hour from Leon. I wouldn't suggest Jiquillillo if you only have a week, because of the extra transport time.

And Ometepe is way quiet at night. It's quiet during the day too. It's a place to connect with the natural world.

.....and the spiritual world, its magical.

We actually have closer to 6 full days unfortunately.

Connecting to the sprit world is not on the list for this trip. ;)

Looking more for adrenaline activities- canyoneering, white water rafting, volcano hikes and wild life spotting.
It's sounding like we would be better of heading to Leon first. Then a day trip to the beach for surfing. Followed by heading to Esteli and a day trip to somoto. Then possibly rafting on the Tuma. (anyone know what class the Rapids are currently?)
Not sure after that, hopefully there is some good hiking with waterfalls and wild life in the area...
How interesting are the coffee tours?

6 full days and adrenaline :

Two days Leon for Cerro Negro and Las Penitas (surfing, maybe kayaking). A day to get to Ometepe with a stop at active volcano Masaya. Ometepe : one day to climb Concepcion (tough hike, will take all day, great views, the crater is often shrouded in clouds but even when it is it is a scary, crazy place : the warm earth, the cold wind, the steam, the grit flying around, the realization of where you are). The feeling of accomplishment is enormous after climbing that volcano. Then you have two days left for swimming, kayaking, ziplining, wildlife watching at Charco Verde or around Playa Santo Domingo and if you are very fit climb Maderas as well your last day (only one viewpoint but amazing cloud forest and crater lake at the top. Monkeys. Birds. Hard, steep climb. Very muddy and slippery) or hike to the San Ramon waterfall (more monkeys) and go for a dip.

Or : Leon two days day (Cerro Negro, street food and Las Penitas for surfing and kayaking). Somoto. Matagalpa : rafting and hiking. Check out the Matagalpa Tours website I mentioned before (many hikes are mentioned although a lot are overnight) and contact them and ask about the rafting (they can tell you what class the rapids are, it is rainy season so you might be in luck) and hiking. Also contact this hostel in Matagalpa (they offer hiking tours and a double waterfall tour and can give you information about the rafting as well) : http://www.labuenaonda.com.ni/tours-transportation/tours-matagalpa/
You are leaving soon. I would start contacting these people.
Selva Negra has good hiking (on your own, 10 miles of trails, wildlife) : http://www.selvanegra.com/en/l_a_hikingdetail.html

Coffee tours are most exciting during the harvesting season (October to February). But ask La Buena Onda.

If you give up on the wildlife you could stay your whole 6 days around Leon. The city (street food) and Cerro Negro. Surfing in Las Penitas. Overnight camping trip to volcano Telica or for a real challenge climb volcano Momotombo or volcano San Cristobal (the highest in Nicaragua). Or go on the two day El Hoyo trek (amazing volcanic sinkhole, this trek can include Cerro Negro). Lots of hiking and volcanoes in that area ! http://tours.sonati.org/en_tours/treks.html