We asked ourselves a lot!! Some people suggested Pesos, others suggested US dollars… someone even recommended Euros (don’t bother taking Euros!). Of course, you can change money in your hotel and in the towns and cities, but if you want to go prepared it’s nice to know the currency you’re most likely to need.
Unable to decide, we asked my sister-in-law (who’s originally from Northern Mexico). She recommended both!
So we took a number of USD (mostly in small denominations intended for use on resort as tips) and we took Pesos too. In reality, when we got there we found we could easily have gotten by just with USD and no Mexican Pesos. Everything had the USD price on it. In some cases, US dollar pricing was even more prominent than the Pesos pricing. You could pay for everything in Playa Del Carmen and on sites popular with tourists like Chichen Itza, with US dollars.
You get the best deal on your departure tax, however, if you pay in the local currency, so it is worth having Mexican Pesos for that.
So to summarise as to whether you should take Mexican Pesos or US Dollars to Mexico? Take both! But if you can only take one or the other, go for the dollars. Many shops were more keen to take payment in USD than the local currency.