Should we change our money to pesos before arriving? Can you tell us about the local currency?

You don't really need to change money before arriving in Zihuatenejo, they accept dollars for cabs and colectivos. The dollar has really gained against the peso in recent months, so find out the rate at the airport or in the US the day before you go, and make sure the transportation folks give you something close.   

We recommend going to a bank in Zihua or Ixtapa and changing cash or Traveler's Check's. To rent a car, you'll usually need a credit card, but they'll give you an exchange rate that's as good or better than the local bank rates.  Around town, in Zihua, and Ixtapa, some restaurants and shops almost always accept dollars, but make sure they give you something close to the going bank rate, so it's best to change some of your money to pesos. Some restaurants and businesses in Troncones and elsewhere, take credit or debit cards, so just check before you begin feasting and shopping.