Shoud we spend 3 nights (2 full days, will be flying into Queenstown the afternoon of the first nights stay) in the Catlins (best base town/area?) and visit Dunedin/Otago Peninsula when we leave the Catlins, staying 1 night Dunedin or Otago?

I had planned on 3 nights on Otago Peninsula or near Dunedin, but Catlins look interesting ~ beautiful scenery? Easy walk/hikes?

The Catlins is beautiful, but we've found it's best explored in sections as its difficult to see both the north and south from one base. With two full days you can see some of both, but it'll most likely involve some backtracking.

On our first visit to the Catlins, we spent three nights near Fortrose and did just that - one day to explore each. We barely scratched the surface and missed more than we saw.

However, we did discover that we preferred the beaches, waterfalls, and forest of the north over the seemingly endless pastoral countryside of the south. So, the second time we visited we opted to stay in the North Catlins. We then had to choose between staying near the beach or near the forest….the forest won (Mohua Park Eco Cottages, 20 minutes south of Owaka).

Lots of options. Lots of walks. Beautiful place the Catlins. Windswept comes to mind

We stayed at this camping ground just out of Owaka. It was so beautiful, good hear the native birds all the time, and there were sea lions on the beach. We did have a caravan though.
Pounawea Motor Camp.

Thanks for the help, we have booked a lovely house via AirBnB outside Owaka for 3 nights. View of the Ocean and sheep!
And as we will be driving from Dunedin we will have some time on the drive to explore