Initially it was the fish that drew visitors there. There was no drinking water so it was not inviting for any other reason. However that changed in the 1920′s (from Wikipedia):
John Stone from Ajo, Arizona came here to build a hotel/casino to take advantage of people coming over the border to escape Prohibition. He drilled a water well, and set up flight service from Phoenix and Tucson to bring in tourists to drink, gamble and fish. It is said that Al Capone frequented the place. The business did well until Stone and the locals began to quarrel. Stone burned down the hotel and blew up the water well before he left.
He burned it down! Wow. Kinda drastic I tried to find more info on ole John Stone but couldn’t find any.
In the 1930s, under President Lázaro Cárdenas, a railroad was built to connect Baja California to the rest of Mexico, passing by Puerto Peñasco. The town began to grow again. The railroad line created new population centers and the initial layout of the city and port of Puerto Peñasco was begun in the 1940s.
Until the 1990s, there had been little tourism here except for campers, fishermen and those looking to take advantage of Mexico’s legal drinking age of 18. The municipality’s pristine beaches with clear waters stretched for a hundred miles north or south with almost no development.
The push to make Puerto Peñasco or Rocky Point a major tourism center was initiated in 1993, with the government joining with private investors to build condominiums and other facilities. The goal has been to take advantage of the area’s proximity to the United States and Arizonan’s preference to spend beach weekends here.
To promote tourism here, the city was declared to be part of the border “free zone” although it is about 100 km from the U.S. This means that foreigners can drive from the U.S. to Puerto Peñasco without obtaining visas.
Since March 1, 2010, all U.S. citizens – including children – have been required to present a valid passport or passport card for travel beyond the “border zone” into the interior of Mexico. The “border zone” is generally defined as an area within 20 to 30 kilometers of the border with the U.S., depending on the location. Regardless of the destination in Mexico; however, all U.S. citizens age 16 or older must present a valid U.S. passport book or passport card to re-enter the U.S. by land. http://travel.state.gov/travel/cis_pa_tw/cis/cis_970.html#entry_requirements
Beaches here include El Mirador, La Cholla, Estero Morúa, Las Conchas, Playa de Oro and Playa Bonita.
Many residents here are American, most restaurants offer menus in English and most business accept dollars. Puerto Peñasco is popular with retirees, especially those from the United States who have trailers and RVs. However, there are retirees here from all over the world. The town has an English language newspaper as well.
When you go, don’t forget your Mexico insurance!
I would also suggest: a few water guns, a cooler, a cell phone, some good friends, and a fun-seeking spirit! Oh, and sun block!