My understanding of cholesterol is a little limited, but my husband knows a lot as he sells a cholesterol med.
First thing I want to correct is that you want your LDL (bad cholesterol) as low as possible, and your HDL (good cholesterol) as high as possible.
Cholesterol levels definitely have BOTH a hereditary and dietary component to them. You can't change your heredity, but you can change your diet to help.
Omega 3 fatty acids can be found in a lot of different sources - fish oil happens to be one good source. But, previous posts are correct, the quality of the fish oil can vary significantly. One big problem people encounter is burping the taste back up which can lead to people not taking the pills. There is a prescription (NOT the one my husband sells) that I've heard is really good and has fewer side effects. It is called Lovaza.
Have you had your triglycerides checked as well. They are tied into cholesterol and cardiovascular health. There are also medications available to lower your trigs (abbreviation) should they be an issue.
There is no evidence that something like South Beach is going to have that kind of impact on your numbers. But, generally speaking, the fattier your food, the more likely you are to have high LDL (low density lipoprotein - bad cholesterol).
One thing to take into consideration about medications - there's nothing that says you need to stay on them forever. You may need a prescription for a few months to help lower your LDL and raise your HDL, but once you get it under control with changes to your diet, you should see improvement and may not need them.
However, a recent study presented at the American Heart Association meeting (found this via twitter) showed that one medication may actually receive FDA approval for preventing cardiovascular issues in people with normal cholesterol levels but a family history of problems.
Your best bet: eat many, many, many more fresh fruits and vegetables. If you are going to cook them, limit the use of butter/oils. Limit your portions of meats to 4 oz, and choose leaner meats. Ground turkey is a good substitute for ground beef, though 90/10 ground beef is lean. Try to incorporate more fish into your diet and reduce carbs (DON'T eliminate them) if possible.
My best advice: speak with your doctor and your insurance company about seeing a dietician. You may be surprised that your insurance covers the costs, and I've never heard anyone mention that it was a waste of their time.
Good luck!