I grew up watching The Nutcracker almost every year, so when we found out that it was being performed at the historic Opera House, my heart did cartwheels. We hadn't planned on going, but we came across it in the local tourist newspaper. If you are ever in Budapest around Christmas, do yourself a favor and get tickets--it was by far the best performance I've ever seen.
The most surprising thing for us was when our personal tour guide told us how hard it was for Hungarians since the downfall of Communism in 1991. She said, "Look at the people on the street--can't you just tell how sad they are?" That sounds like a research paper just waiting to happen.
Our favorite day in Budapest was spent walking around the Castle District on the Buda side. There were long rows of buildings painted different colors (think Rainbow Row in Charleston, SC), great shops, funky cafes, and great views of Pest and residential areas.
Quick Tips:
A popular souvenir to bring from Hungary is the popular Herend pottery. If you are debating, buy it! It is tons more expensive to buy it in the States. Most places will give you a discount, especially if you can pay cash (forints), and will even ship it home for you.
Understand the currency before you go. They have not transferred over to euros yet (but they will soon). = roughly 1,000 forints.
Check out the International Christmas Market. It's in the square right in front of Gerbeaud's, a great coffee shop.
For food, try goulash, gundel pancakes (either with chicken and paprika or with nuts and chocolate for dessert), and chicken ragoute.
Best Way To Get Around:
Since we were there in the winter, it was hard to fathom the thought of doing any big walking tours. We walked around Buda because it was near our hotel (Hilton Budapest) and b/c there were several shops and cafes to hide in. It was recommended to take the 25-minute walk across the Chain Bridge to get to Pest, but we opted for a taxi. Driving in Budapest was unfathomable--traffic was haywire.