For being one of China's big tourist draws (for both Chinese and foreigners), there are precious few decent travel guides online. Sadly, Wikitravel's is the best. Well, I just got back from Qingdao where I scouted it all. So here's a whole bunch of insider tips just in time for Beer Festival (last two weeks of August).
Three things are true about Qingdao: the sea is big and clean (enough), the seafood is super fresh and the Tsingtao Beer, for whatever reason, really does taste better there.
Aside from the beaches, Qingdao has Laoshan, an old famous Daoist mountain, and Fushan. Locals will all tell you to check out Laoshan but Beijing's got plenty of mountains. We suggest forgoing the entire day it takes to do Laoshan in favor of an afternoon climbing Fushan, near Shilaoren beach, for scenic views of the ocean.

Here's the beach scoop. There are several city beaches, Bathing Beaches Nos. 1, 2 and 3. One and two are disasters--more people than sand and more plankton than people. Apparently the plankton problem is especially bad this year. It's turned beaches into what looks like a football pitch.

Station yourself at Beach No. 3. It's small, there are no carnival rides, and the neighborhood behind it, Badaguan, composed of gorgeous colonial-style mansions, gives the former French Concession a run for its money.

You can also rent decent city bikes on Beach No. 3 for RMB10 an hour. This is the best way to explore the 20 kilometer seawalk which stretches, nearly unbroken, from Beach No. 1 all the way out to Shilaoren beach. Along the way you'll pass through the Olympic Sailing Center and some crazy looking thing called Polar World.

Shilaoren is the best nearest beach if you really want to get in the water. Its broad, fine sands are framed by Fushan mountain. You also get the biggest surf there (enough to bodysurf, but real boarders will be disappointed). It's reasonably free of that noxious green algae ("beard of heaven," the locals call it, hutian) which chokes up the other beaches. You'll only have to contend with the ocassional floating plastic bag. Bring sunscreen, but you can buy everything else on the beach and even rent a locker for valuables. Cycle out and spend the day out there. There are plenty of restaurants and convenience stores behind the beach.
If you want the BEST beaches you have to go pretty far (30km away) to Laoshan where there are two beaches, Yangkou and Liuqinghe, both rather hard to get to but quite worth it. You can get a cab out for RMB100, but you'll have trouble getting back in. I recommend sticking to the city beaches.
In the evening, Beach No. 3 is where you want to be. There are a couple of excellent homestyle seafood restaurants just off the beach where you point to the day's catch live in the tanks and they cook it up for you. They serve fresh Tsingtao by the liter. After your feast, grad beers to go and sit on the sands and get an eyeful of the twinkling highrises of downtown. When you're tired of that, wander through the gorgeous Badaguan neighborhood. The travel guides all mention the Yunxiao Food Street, but I'd steer clear of that--the seafood elsewhere is just as fresh with better environment.
For our money, nighttime is the best time to enjoy Qingdao's ocean. That's when the tide goes out and you can clamber around the exposed rocks. You won't be totally alone, but that hardly matters with the sound of the surf rolling in. Our favorite nighttime spot was a little spit of sandy, boulder fringed beach past the Olympic Sailing Center just below a big cliffside restaurant called Yangguang Jiari Restaurant.
If you want to see some of the offshore islands, try Zhucha Island. To get there, take a can to Huangdao (which is a lot easier now with the tunnel and bridge) and then go to the Nantuo dock where you can pick up the boat.
Qingdao's famous beer festival goes down the last two weeks of August. It's a raucous, drunken good time, but prices are all doubled and the tourist population tripled. Wait until all that's over if you want a little alone time with the ocean.

I stayed at the Clearsea Arts Hotel, which is housed in the old Governor's Mansion from colonial days. It wasn't bad, but the beds were hard for the money (RMB700 a night). Top of the line is the Intercontinental Hotel right by the Olympic Sailing Center, but it feels soulless. The Haiqing Hotel is right on the ocean out near Shilaoren. That looks like the place if you want to be one with the ocean. Other than that, there are plenty of HomeInns around (RMB300+ a night).
Thirst inducing article. Hope LeeMack got a bit of a chance to wet his whistle in Qingdao. Ganbei to you all! Or as the Germans like to say Prost und ZumWohl.
@Pablo You know Happy Valley is having a beer fest right now? Drop me a line, I'm putting the band back together.
Oh, and to paraphrase Derrin Zikks: 'this article's title is preposterous, my initial comment was clearly ironic'.
I swam in the sea in Qingdao once, and came out with crude oil all over me. Be careful!
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I really wish there were more of these sorts of articles on this website. Maybe you could do a 'Complete Guide to Hong Kong' - I hear they have some fantastic beaches.