Which is the Best Caribbean Destination for about $1200-1400 for 2?

When do you plan to travel and from where will you be flying?

Take a look at Maho Bay St. John Virgin Islands.
http://www.maho.org/
I think you would like it!

Oh, sorry I forgot! I would like to travel in July of this year from NYC (JFK or LGA doesn't matter which).

Thank you!

Does that include airfare?
Air alone will take up most of it to the best destinations (think around $500 plus each)

You might have to stick to All inclusive in Dominican Republic, or Mexico. If air goes on sale, you can probably consider Belize or Costa Rica too.

take a look at tnt vacations. i just looked at dom rep, aruba & riviera maya and each offers 1 or more pkgs in your price range or slightly above. other islands may as well.
tnt offers air included all inclusive resort packages.
all inclusive means room, all meals and booze, some activities are included in the price.
i can't speak for any of these specific resorts but as blamona mentioned some of the best deals are on maya riveria.

apple vacations does the same thing. assuming this link works here's a sample. catalonia royal tulum w/air for $1579.06: https://www.applevacations.com/pricing.do;jsessionid=ANwqt-74dMiLtqKeYEC1eFe
also just this morning i saw a piece on the today show that said mexican tourist destinations are making a huge pr effort to get ppl back to mex after the swine flu thing. resorts may be offering excellent deals - call a couple of the bigger travel agencies near you.
for things to do in mexcico look at locogringo.com

Given the current discounts, I think you might be able to go Mexico for that kind of budget. But I think you're not being realistic about the cost of a Caribbean vacation otherwise. The budget may be workable if you are willing to stay in a small inn off the beach and if the budget doesn't include airfare. If you mean $1,200 to $1,400 for 2 people including airfare, then I don't think that's going to happen.

But you could get a hotel for $125 a night in several islands for 6 nights, budget $40 a day each for food and drinks (assuming you eat 2 meals in and spend the lion's share for dinner or lunch out), and you'd have about $200 for other things like tours and the like. It's a pretty spare budget, but it would be doable on some islands. Of course, only in July, when rates are lower.

Yes, there are a few AI packages that might work for you (but probably only for 5 nights at the lowest-rung resorts). I think your money would go farther if you'd forego the AI idea.

You could do this by staying at the Royal Turtle Inn on St. Maarten, for example, and might still have enough money to rent a car, which you'd need. Breakfast is included here, but lunch would have to be sandwiches, but the rooms have a fridge and coffeemaker. You could do something similar at Carringtons in St. Croix if you stayed in the cheapest room. Or MVC Eagle Beach on Aruba. Or maybe if you can get a deal at Divi Heritage in Barbados, which is a true bargain and gives you a full kitchen, not to mention is within walking distance of shops and restaurants. There are also some places in the Bahamas that might work, as well as some little backpacker type places in Cabarete in the DR.

The trick is that there are very few properties on each island that would fit the bill, and you'd be traveling more like a backpacker than a typical Fodor's tourist. But it's doable with some sacrifices.

How long do you want to stay? Your best bet is to skip the islands and go to Mexico. Thanks to the flu issues deals abound in the country. I am not sure what is available in July but I have seen AI trips at good resorts, including airfare, for up to 7 days for as low as $500 per person for spring and fall. Exact price will depend on where you are flying out of though. Check Apple Vacations for those packages. Also keep an eye on the Travelzoo Top 20 list that is released every Wednesday. There are often great last minute deals to the Caribbean.