The three towns are totally different, and they attract different crowds. Punta del Diablo hippie heaven, with lots of people in their late twenties to mid-thirties. Piriapolis is for retirees or families with small kids and small budgets. I don't know much about La Paloma, but heard it's pretty nice. Many Uruguayans own sumer homes there.
Piriapolis is not technically on the ocean, which starts on the Brava side of Punta del Este. The waves are small, and the water not quite green - brownish on some days.
No matter where you go, the beaches are all clean and beautiful - white sand all the way, from Colonia to Chuy.
Restaurants are NOT Uruguay's strong point - the food is bland and overpriced, and and the coffee is awful - I've lived part-time there for the past four years, and haven't been able to locate a cup of good expresso.
Sara