If you want to be on the south end, you don't want Mata Chica, as it's five or so miles north of town. The Palms is basically in town, just at the south edge of town. If you don't need a two-bedroom unit, which is all Banyan Bay has, you might also look at Banana Beach -- the one-bedroom seafront units are terrific, not to mention being a very good value, and construction of the new units should be completed fairly soon.
--Lan Sluder