You could probably have rented the car for a week for the price you'll pay for a few days had you done it in the U.S. Since you didn't, you'll need to evaluate costs more carefully.
1. You must have MEXICAN 3rd party liability insurance, which does not cover the auto, just the damage you do to others or their property. Avis includes this cost in their rental quote, so they may be higher than other companies. The cost for 3rd party liability is generally about $10.00 a day, so factor that in.
2. If your credit card covers international rentals, you can use it in Mexico. Most companies (including Avis) will allow you to decline their insurance--and you must decline the rental company's insurance or the credit card insurance won't take effect.
Some people feel more comfortable paying the rental car company's fee for insurance because, obviously, the rental company is on-site to deal with any problems. Others prefer to save the approximately $30.00 a day in insurance on the car and let Visa/Mastercard/American Express deal with it.
3. There are lots of things to do if you have a car. Google "Trip Advisor + forum + Cabo" and you'll get lists of where to go/restaurant suggestions/etc.
4. Trip Advisor people are very fond of renting from Domick; he includes all insurance and is, apparently, easy to work with. He also costs more than other agencies like Thrifty/National/Avis/Hertz.