Although Uruguay is more renowned for its white, sandy beaches in places like Punta del Este, Colonia has a different, more subtle kind of charm.
The tango was invented in this country, contrary to popular belief. Apparently, black slaves brought over by the former Portuguese colonists invented it, along with their prostituting partners, in the brothels here. Indeed, the black population here is higher than it is in neighbouring Argentina and Paraguay.
The tiny streets of Colonia are full of artisian's shops selling everything from ceramics to sweaters, and the restaurants range from cheap fast food like salad and pizza, to more traditional Southern Cone fare like beefsteaks. Prices of everything are comparable to those in the U.S.A.; nothing comes too cheap here. That said, the handmade sweaters are unique and a good value, and the open air markets offer many.
The best time to go to Colonia is between November and April, as the weather is warm and the breezes are cool.
Two things that are ubiquitious in Uruguay that you must try are big, juicy steaks, similar to the excellent beef found in Argentina, and mate, the grass-like drink found all over the southern cone. Though it is not intially that tasty, (if you put the cuttings from your front lawn in tea bags it would surely taste the same) it is part of an important social ritual: mate is served in hollowed out gourds and is sucked up through metallic straws that filter hot water through the herbs. The gourd is passed around from person to person to be shared amongst friends. Uruguayans are famous for their addiction to the drink, and can actually be seen everywhere with thermoses of hot water under their arms and little bags containing their mate kit!