You are basically right, we have "iść + complement of place in instrumental" which means to go/walk somewhere. So we have e.g. iść ulicą, chodnikiem, drogą (which mean quite the same as iść po ulicy, po chodniku, po drodze (we use the locative case after "po" when it means on or over referring to places)). But back to iść + instrumental. We always use the instrumental here, nevertheless the sentence is negative because the word in instrumental is the complement, not the object of the verb. @DOWN: Thanks, no problem, anytime! ;-)
"kawa" is Nominative (the basic form, used mostly for the subject of the sentence), "kawę" is Accusative (used for the direct object of most verbs), "kawy" is Genitive (used for the direct object of some verbs as well as when Accusative is negated).
"widzieć" (to see) takes Accusative. So "We see coffee" is "Widzimy kawę", but negated Accusative -> Genitive. "We do not see coffee" = "Nie widzimy kawy".