The guidebooks will tell you to go to Barb's at Fisherman's Wharf for fish and chips, and I wouldn't discourage you. It's right by the houseboats with a nice view of the water, and seals to feed to boot. We go there quite often.
The locals have other favourite restaurants for fish and chips, however. Right in the heart of the tourist district is Red Fish Blue Fish, which many locals swear by. A little farther afield is Haultain Fish and Chips, which often wins best-of awards. And if you get as far as Oak Bay, check out Willows Galley at 2559 Estevan. It's tiny walkup place, but if it's nice out, sit outside and enjoy.
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