I once had an Italian corner me at a party and for nearly 20 minutes sang the virtues of Prague. The 'song' went something like this. "I ate like a king every night for change - Prague. The gothic, cobbled streets were magical to explore - Prague." And so on, every verse ending with a Prague chorus. (For best results, draw out Prague with a rolled-r and a breathy gue. Add in an Italian accent.)
Perhaps it was like that a decade ago when he went, but now Prague, while charming, is no longer the secret capital of Europe. The word is out; it is crowded and expensive. Worth a trip, yes, but not the magical mecca of the East (Europe) it once was.
Instead, if you want magic, go to Budapest. (To say it like a local - Budapescht.) It probably also helped that I made the trip at the end of October, when whatever crowds had been there had dissipated. Budapest is actually downright cheap: try €6 for a bed in a hostel downtown. Dinners for just a few euros and attractions for the same. Its accessible: Budapest has the oldest subway in continental Europe, an extensive trolley system (great way to see the city) and buses for all other corners. Here's my picks for a trip:
The Grand Hall Market
Luckily, this place is seeing way better days than under communist rule. There's 1 paprika stand for every 2 vegetable stands. Most stand owners won't speak English, so be prepared to use motions, Hungarian or German. I picked up some great paprika and vegetables here and kept my costs low by cooking half my meals at the hostel. Mmmm, vegetarian goulash.
Városliget: The City Park
Here you'll find examples of each kind of Hungarian architecture and the statue of Anonymous. Literally, this guy is called Anonymous and he apparently is some monk that wrote the only history of their country. They take his book as truth--nuts!
Best seen with a tour guide to explain all the history you're seeing. I recommend Absolute Walking Tours. Pick up a coupon card for them at the tourist center.
Absolutely gorgeous. I recommend going as the sun is setting for the best spooky effect of the light on the art deco graves. Make sure your camera battery is charged!
The Children's Railway
Probably the ultimate off-the-beaten-track sight. Take a subway to a bus to a cog-railway. Walk up a hill. You'll reach a miniature train station run by children. It was started by the communists, but the Hungarians still love it. The ticket sellers are kids, the conductor is a kid, and they're all dressed up in little uniforms taking their jobs very seriously. Go, seriously.
The House of Terror
Hands down the best Nazi/Communist museum in all of Europe. Artsy, thought-provoking and downright horrifying.
There's many here in Budapest. Budapest was one of the first places in Europe to get the coffee craze when they were invaded by the Turks. Today Budapest has a fine tradition of coffee houses, where the intellectuals of the day gather.
When Eastern Europe was liberated from Communist rule, most cities did the cathartic thing and smashed the commie statues to bits. Not Budapest, they took all the statues to the outskirts of town and made the Statue Park. It is on the side of the road, completely unkempt and overgrown with weeds. Fitting and fascinating.
Speaking of cathartic recommend doing the baths at least once during your stay. The Gellert Baths are the fanciest, art deco ones with beautiful tiled rooms, but my favorite is the people's bath house, Szechenyi. You'll find the Szechenyi bath in the city park. It's huge, with several outdoor pools. Make sure you catch the old men in speedos playing chess poolside, book yourself a massage and wait in line to stand under the spouting fountains in the pool. Get used to seeing lots of skin.
Lastly, make sure you stop by a City Spy recommended hostel and pick up a hard-copy of a Mr. Gordonsky's City Spy Map. I found these little guys, to be the best maps and have the best reviews of food and hangouts across Europe.