Hi Balwyn
I have stayed in Singapore many times, normally go two and three times a year, I (as well my parents) have stayed on Sentosa a few times, as thewinchester (who is a friend) said, if you're going out there for say the day then its worth staying in the city.
I went to Universal Studios last April and half the rides were'nt open or not in operation i do believe now its up and running properly but according to some friends they can be days where some of the popular rides will be closed like the BSG Dual Coaster.
There are plenty of other stuff to do on the island like Wavehouse, Fort Silso and Imbiah which has the Merlion, Skyride and Luge and also the new MegaZip.
There's also some other great activities like Images of Singapore, The Tiger Tower and Underwater World, and in the evening there a laser and light show called Songs of the Sea.
If you want to hit the beach there's Cafe del Mar and you can even ride a Segway. There's always new things opening up, there were building a new attraction near Beach station when we were last there in November.
Cost wise, its $3SGD to get onto the island if you use the Sentosa Express but once you're on the island its free, if you want a bit of a walk there the new Sentosa Broadwalk which opened last month and is only $1SGD (i believe) also there's the Cable Car which goes up to Mount Faber. If you choose to stay at a hotel on the island you get a visitor pass which is unlimited uses on and off the island for free.
If you are just coming onto the island for the day you can buy packages which you can check out at Sentosa station inside VivoCity or at any of the Sentosa express train stations.
Staying on the island is not cheap the new Resorts World has the Hard Rock Hotel, Hotel Michael and Festival, prices can range between 250 to 600 a night depends when you go and where you stay.
There's also Silso Beach Resort (which i stayed at with thewinchester) and Shangra-La Rasa Sentosa (which my parents have stayed many times) both are good reasonable hotels, although the Shangra-La have recently gone over a make over and increased the prices quite a bit.
You might find the weekends are more expensive than during the week as many Singaporans head out there to relax and unwind.
I will be at Sentosa next week (staying at the Hotel Michael) so when i get back can update this for you.
But i'm sure you find plenty to do, there's also many things to do on Singapore as well, but if you choose to stay on Sentosa and want to head into the city, like thewinchester said it can take around 30-60 minutes to get to certain attractions and will be alot of walking of you choose to go by public transport.
Hope i've help you out, any questions, feel free to message me.