sabah in 3 days

Four days in KK is a lot. But there are the TAR islands where you can do day trips, though prices have gone up to about R$50 just to go out and back. There are now a LOT of tourists and tour groups. If you want a bit of solitude head for the smaller islands. Another inexpensive, though neglected site is the KK Bird Sanctuary just over signal hill (about a 40 minute stroll from the Clocktower). Other sites are the Philippines wet market and the Sabah Museum.

Labuan is pretty boring in my opinion. It's a modern financial center created for off-shore banking. About the only entertainment there are karaoke clubs with the requisite entertainment girls. Beer/alcohol/cigarettes are cheaper there, since it isn't taxed. That makes it heaven to some travellers. The quality of hotels at the lower end of the market is pretty bad though. No great beaches. It's a reasonably big island...with several golf courses for the bankers and their clients. No real tourist sights.

Opposite Labuan is the Klias wetlands where one can see proboscis monkeys and fireflies. This is not so far from Beaufort where the train up the Padas river gorge begins. It ends in Tuaren.

CORRECTION: The Steam train runs from Beaufort to TENOM (not Tuaren).

I was in Labuan (95 sq km) 3 weeks ago (the vehicle ferry from Menumbok is RM5 each way but very slow but there are heaps of buses that connect from/to KK) and stayed at the Tiara which was very nice. We drove all around the island looking at the beaches and the best ones are on the West coast. A large part of this area is public reserve and easily accessible. Near the top is the Manikar which is an enormous resort on a nice beach but it is currently closed for rennovation. The sea was quite rough when we were there and I suspect this may often be the case.
Instead of Labuan you might like to consider Pulau Tiga. I just spent 3 days there at Pulau Tiga Resort (there is also Borneo Survivor Resort). The beach is lovely and the water warm and there is really good snorkelling right off the beach as it is also a marine park. IMO you will get better swimming/snorelling here than in TAR and it will be a lot quieter but of course it is more expensive but the rates quoted include park fees, speedboat transfer from Kuala Penyu and all meals. It is operated by Borneo Divers.
LONGHOUSE - 2 Days/ 1 Night - RM 158.00 per person
(ceiling fan + triple sharing) - Extension Night - RM 105.00 per person
* Single Supplement/ Traveller - Additional 50% on top of the above rate
I think the other resort does transfers from KK and has a campground.