25 days isn't a lot of time for 1 country, let alone 3 - lots of time will be spent sitting on buses getting from place to place which you've mentioned in other threads isn't your favorite way to travel.

Of the 3, I've just visited Honduras; I've visited Central America about a dozen times but keep returning to Guatemala, Honduras, and Belize - still I've barely scratched the surface! My photos with blog, travelogue, and review site links (and therefore all my recommendations) on the main pages of the collections are here:
http://www.flickr.com/photos/staceyholeman/collections

If you search on the Thorntree forum for a poster named rultikart you'll come up with some fabulous ideas, especially for Honduras. Have a great trip, whatever you decide!
http://www.lonelyplanet.com/thorntree/forum.jspa?forumID=12

My original plan was to visit Honduras and El Salvador but thought maybe I can also add Nicaragua. I might stick with the original plan and perhaps skip Nicaragua? Which places do you recommend for Honduras?

In Honduras I've just been to Copán (more than a month total spread over 2 trips), Utila (2 week-long visits), Roatán (2 visits of about 2 weeks each), Guanaja (2 weeks), and La Ceiba area (about a week and a half total). We've loved them all and have barely scratched the surface. It would be easy to spend your whole trip there, splitting between Copán, La Ceiba area, an island, and maybe 1 other stop - the north coast, Lake Yojoa, or the Gracias area, maybe? Moon Handbook for Honduras is a good guidebook - background info and suggested itineraries as well as travel specifics. Happy planning!

I was recently told by a Peace Corps volunteer that while Nicaragua in general is great, that Managua is not. He also raved about Granada in Nicaragua.

I would skip Honduras, Nicaragua has a lot more to see and do and way safer.
But don´t bother with Managua.
Here is a list of ´highlights´in Nicaragua:

http://www.thenicaraguablog.com/nicaragua/nicaragua_top_10_list/

In Granada at the moment. Lovely city. Just left Isla Ometepe yesterday. Wonderful, peaceful island.

I'm loving Nicaragua.....

I would recommend Granada in Nicaragua as well as a tour of the Nicaragua lake. Leon is a busy non-touristy town, with a great modern art museum. Visit the roof of the main cathedral when you are there. Also, San Juan del Sur is a nice beach town with great sunsets. In El Salvador, - go to Suchitoto. It is aspiring to be Antigua in terms of galleries, hotels and restaurants (cute but of course far from it). According to the guidebooks, the best hotel of El Salvador is there (I stayed there, but sorry, forgot its name). Good restaurants. In Honduras, Copan was great (definitely go to the museum, not just the site). Also, if you are going to Utila, why not also Roatan? Different, but same amazing snorkeling and diving.

Honduras - Copan
Nicaragua - Granada, Masayda and Lago de Nicaragua.
El Salvador - La Ruta des Flores, Suchioto and Joya de Ceren.