I went there for my honeymoon 10 years ago, as well as a few other trips over the years (I'm a native Michigander). If you go during the summer, do NOT go on a weekend, as it will be very crowded.
The main street is little fudge shops, and tourist stores -- you need to get away from that to really enjoy the island, IMHO. I highly recommend renting bikes and riding around the island -- there are a few different old graveyards on the island that are worth stopping and looking at the headstones, as well as some nice natural wonders kind of things.
You can rent a buggy, too, or go horse-riding. There's also a fort with re-enactments, and the Grand Hotel (you have to pay to get in, but we always just sneaked in when we went). And there's the aforementioned butterfly garden.
Personally, I think to really enjoy it, you need to stay at a B&B for one night -- it gives you time to explore the island at a leisurely pace, and some of the B&Bs are just gorgeous. I wouldn't stay at the Grand Hotel myself, as it's very expensive, and really not worth that cost.
Oh, and rent "Somewhere in Time" before you go -- it's a lushly romantic film that was filmed on the island. It stars Cristopher Reeve and Jane Seymour, and is really a lovely film, if rather schmaltzy ;) But it is fun to go around the island and see the spots that were in the movie; the island also gets a brisk trade from fans of the film, and you'll find the soundtrack and other memorabilia sold in a lot of the stores.