Everyone I know is going to Phuket! Rightfully so, it is pretty great. Here are my picks (die-hard favourites marked with an asterisk):
A perfect Phuket Town night out starts with dinner at La Gaetana* (eat whatever Gianni suggests, and share your mains), moves to drinks and dancing on tables with lip-synching ladyboys at Ka Jok See*, then continues with live music and a bit more dancing at Timber Hut (nothing special, but there's usually live music and a good mix of people). La Gaetana is small, so it's best to make a reservation, especially on weekends (076 250 523).
Raya has Royal Thai food in an authentic Southern Thai house; some nights there’s a market on the opposite side of the street. Lemongrass and Natural are other long-standing local Thai-food favourites.
If deep-fried soft-shell crab interests you, I can direct you to the crab-eating monkey restaurant (it's out of the way—next to a mangrove forest, hence the crab-eating monkeys—and we don't know its real name).
Phuket expats are obsessed with over-the-top Sunday brunches: my choice is Indigo Pearl's* (076 327 006). Book as far ahead as you can, because it does sell out; bring your swimsuit and spend the rest of the day hanging out in their pools. Second place goes to Trisara's champagne brunch, where my 87-year-old grandpa jams on the piano—the views are incredible but it's close to double the price.
Have lunch at Ko Ta Khao Man Gai* (pictured above; it's a few restaurants down the linked list) is possibly the cheapest and best meal you’ll have in Thailand—if nothing else, go here. Get the number one and also try the Thai ice tea or sugar cane juice. For a mid-morning or afternoon coffee break in Phuket Town, try Kaffe.
Favourite foods to look out for: fried chicken from Muslim lady street vendors, som tam, phad siew (phad thai's underrated wide-noodle cousin), roti pancakes with condensed milk and sugar, rambutan, mangosteen, starfruit, pomelo, tamarind, little brown lychee-things, sour mango with chili sauce, Penang curry, and kanom krok (little coconut pancakes cooked in special griddles with round holes).
The sea canoe day trip* is one of the best Phuket experiences around—I've gone at least five times (that's a photo of one of the stops above), and always love it.
use this map): check out the market, Sino-Portuguese architecture, Soi Romanee (pictured below), Dibuk Road, and Chinese temples. The Governor's mansion has been beautifully restored as a restaurant, and its staff are happy to let you wander around inside.
More things to do:
Elephant trekking with Siam Safari. Wat Chalong is also nearby. Spa package at Cannaceae Spa: you can mix and match—I like the sauna, salt scrub and traditional Thai massage*. Make an appointment the day before (076 524 608). Splash jungle is expensive, but worth it if you're into water slides. My friend Mikey manages Flying Hanuman, a brand-new jungle zipline.
Get some food and beer (I'm a Leo fan), go to Rawai beach, rent a longtail boat, and go island hopping for the day.
Patong is a mess (Travelfish accurately calls it a "an ugly tapestry of the surreal, debauched, and truly desperate" and "everything that tourism in Thailand should not have become"), but if you must: Scruffy Murphy’s on Soi Bangla has decent live music, the Ice Bar is a good place to do shots and cool down, and most people end up dancing at Seduction. On either side of the hill, there's Opus One and Stereolab, and Skylar bar in Kamala is kind of charming; if it's high tide you'll have to wade through the ocean to get there.
As for shopping, the Talad Tai Rot weekend market* on Chao Fa West Road, near Central Festival mall, has tons of food vendors (try the classic mango/coconut/sticky rice), inexpensive everything and a nice atmosphere.
I still haven't eaten at Siam Indigo, but the shop next door is cute. The little shop opposite Ko Ta Khao Man Gai sells lovely leather accessories. The second-hand shoe store next to La Gaetana has a strange and wonderful selection of footwear.
It seems counterintuitive to visit a tropical island and not stay at the beach, but Phuket Town has more culture, interesting restaurants and markets, better prices and fewer touts. Public open-air buses (songthaews) leave from here, so visiting any beach for a day is easy and inexpensive. I like the look of 99 Old Town guesthouse and Chinotel.
If you do want to stay beachside, I'd look into Bang Tao, as it's less developed than other areas. Travel fish has some nice-looking recommendations (and it's a solid guide to use overall). Surin might be a more convenient location for going to Laem Singh, Patong and the like.