A frequently asked question by visitors to Cancun is which currency should I take with me to Cancun?.
Well, both Mexican Pesos and US Dollars are accepted in all shops and restaurants. Neither Euros, British Pounds nor Canadian Dollars are widely accepted, but can be exchanged for Pesos easily enough in the resort.
If you are visiting from the USA, then I would suggest that you use US Dollars for most of your transactions. I would offer the following advice, though:
i) If you use US Dollars, you will use them at a marginally worse exchange rate than the official rate. For example, at the time of my visit in February 2006 the official exchange rate was 10.6 Pesos to the US Dollar. Shops and restaurants accepted payment in US Dollars at an exchange rate of 10 Pesos to the Dollar. By using Dollars, you are therefore worse off by 6%. For most purchases, this will not be a huge loss. Only if you are making large purchases worth several hundred Dollars would I suggest paying in Pesos.
ii) It would be a good idea to carry small amounts of Pesos with you. I once saw a bus driver arguing with an American tourist because he was trying to pay his bus fare in US Dollars, while the buses (I guess), must only accept Mexican Pesos. Even though this tourist had more than enough money to pay his fare, he had no Pesos at all.
If you are travelling not from the USA, then I would recommend using the numerous ATMs to withdraw Mexican Pesos as you need them.
Be careful not to change more Pesos than you need, as the exchange rate for changing Pesos back into other currencies is very unfavourable.
I would also advise against using the exchange desk in the airport arrivals hall as, again, the exchange rate is unfavourable. Instead, if you need Pesos upon arrival, go to the departures terminal and use one of the ATMs in there.