The island is relatively safe, and few travelers encounter problems, but you should definitely take the normal precautions and not let the peacefulness get your guard down. Violent incidents are rare, but have happened in the past.
It's wise to take a taxi after dark, because there are no street lights. Most locals seem to be friendly, but alcohol use in the evening sometimes causes tourists to get harassed.
One other note of significance is the electricity, which typically goes out on a nightly basis for several hours and almost always goes out when it rains hard still the case as of June 2009. There are hotels Casa Canada, Morgan, Martha's B&B, Hotel Paraiso, Anastasia's on the Sea, Picnic Center, Vientos del Norte that have their own generators to cover the gaps in electric service. Verify before booking.
talk
Almost everyone on the island speaks both passable Spanish and English. For most of those native to the island, English is their first language, although there are many inhabitants who have come over from mainland Nicaragua and consequently speak Spanish as a first language. There are also others who speak Miskito or other Caribbean languages or dialects. The English spoken, however, is heavily Caribbean, and real communication can be far from effortless.
currency & prices
Officially, the Nicaraguan Cordoba is the legal tender, but most stores, restaurants, and taxis will gladly accepted U.S. dollars as well. With dollars, however, comes this caveat: if there is the tiniest tear on the bill or pen marks, or any other disfigurement, the bill will not be accepted.
The ATM at the Banpro bank accepts VISA and MASTERCARD, and some hotels and tourist services accept those cards as well, but you had better check before arriving if possible, in order to avoid unpleasant surprises.
Life is a bit more expensive on Big Corn Island than on the mainland, buton Little Corn Island, it is much more expensive.