About 50 people on the Bolivar Peninsula became stranded by high winds and rain and are being rescued, according to the U.S. Coast Guard.
This drama is unfolding despite a blunt warning from the National Weather Service to residents of Galveston in advance of the storm. "Persons not heeding evacuation orders in single-family, one- or two-story homes, will face certain death," the warning said.
The Coast Guard may also send a rescue team to the cargo ship Antalina about 140 miles southeast of Galveston; the ship has 22 men on board.
With hurricane-force winds that extend out 120 miles from its center, the storm, which is as big as the entire state of Texas, is prompting similar warnings up and down the Texas coast.
The center of Ike, now a Category 2 storm with winds of 105 mph, could reach the coast somewhere near Galveston, late tonight or early Saturday morning. Some strengthening is possible before that happens, forecasters warn. A 20-foot storm surge and 50-foot waves are possible.
ABC affiliate KTRK-TV in Houston reports that part of Galveston's historic Strand district is already underwater, even though tropical storm force winds have yet to reach the island.
In the city's west end, which is nearly underwater as well, the ocean is now crashing over the top of manmade sand barriers. Hundreds of high-end homes that dot the beach have water underneath them, KTRK reported.
Hurricane warnings are in effect over a 400-mile stretch of coastline from south of Corpus Christi, Texas, to Morgan City, La.
But on its current track, Ike could come ashore near Galveston and within 50 miles of Houston, the nation's fourth-largest city.
"I am deeply concerned about Hurricane Ike. ... I urge my fellow Texans to listen carefully to what the authorities are saying in Galveston County or parts of Harris County up and down the coast," President Bush said Friday in Oklahoma. "We'll be monitoring this situation very carefully. The federal government will not only help with -- you know, with the pre-storm strategy, but once this storm passes we'll be working with state and local authorities to help people recover as quickly as possible."
More then a million Texans have evacuated, but in Houston, officials made a bold decision: They did not issue a mandatory evacuation order for the entire city.
The call was made in part due to the city's nightmare evacuation of 2005 as Hurricane Rita bore down on the coast. Traffic jams stretched hundreds of miles and people were stranded without food or gas for days on the impassable highways. More people died in the gridlock then in the storm itself.
Galveston, which sits on an island southwest of Houston, is different and the issuing of a mandatory evacuation order was never in doubt. But ABC News found many people determined to ride out the storm.
Scott Lausen has lived in Galveston his entire life. He's still in the same house he grew up in, and he swears it can handle any storm.
"The house was here when we got here," said Lausen, taking a short break from nailing plywood over his windows. "This is the original roof on this house and I doubt it's going to go anywhere now."
Lausen and his older brother Russell -- along with a few friends -- plan on making the most out of what promises to be a harrowing and dangerous experience.
"We got lots of water, we'll fill up the bathtub, get plenty of gasoline, make sure the generator is working, and lots of beer. If it gets bad enough, you get on the roof, get your surfboard, case of beer and catch a wave out," he said with a laugh.
Officials are hoping residents like Lausen are the exception.
"The most important message I can send is do not take this storm lightly," said Homeland Security Secretary Michael Chertoff during a press briefing Thursday. "Do not look back at Gustav and say, 'Well, that turned out to be not as bad as some people feared, therefore I'm going to gamble with this storm.' This is not a storm to gamble with. It is large, it is powerful, it carries a lot of water with it and you're much better served being safe rather than sorry."
But other residents in this Galveston neighborhood about a mile from shore said they would stay put, rather than face the excruciatingly slow trek to safer ground on traffic-clogged highways they faced during Hurricane Rita evacuations in 2005.
Rudy Gonzales is not one of them. On Thursday afternoon, he was packing valuables into a small U-Haul trailer as the storm was about 400 miles from shore.
"Each one you worry about, and each time you think it's going to be the one that really causes the most damage," he said.
Gonzales says he'll come back, but not until the electricity -- sure to go out in the storm -- is restored.
"When you lose power, and you don't have air conditioning or refrigeration, I mean, it's just miserable," he said.
ABC News' Kirit Radia contributed to this report.