I've been to Tobacco Caye many times, though I've never spent a night there (I've always stayed at Thatch Caye nearby, a lovely and really peaceful place). Tobacco Caye is certainly small, but it's crammed with people and competing businesses, and the last thing you'll find there is peace and quiet. I see it as a tropical slum. Many backpackers go there assuming it must be cheap, but when you add it up it is far from cheap.
As for Tranquility Bay I totally agree - a lovely and readily accessible place.