The Grand Bazaar (also the Covered Bazaar or Kapali Carsi) is the place for you if you want to powershop and haggle for Turkish trinkets to take home. There are over 4000 shops within the complex, which is still considered the commercial center of the old city. There are entire streets dedicated to specific crafts, such as carpets, skullcaps, jewelry, gold items, leather goods, etc. The Old Bedesten is an area that deals with various antiques and curiosities.
A good way to arrive at the Grand Bazaar is to walk west along the tram tracks from the Sultanahmet area until you get to the Beyazit stop. Then cut north to enter the complex through one of its eighteen entrances. It is fun to wander around aimlessly even if you do not want to purchase anything, as you will see bright red Turkish flags draped all over the cavernous archways. The origins of the market date back to 1455, and the complex had been rebuilt many times over after several devastating earthquakes and fires. Nowadays the bazaar seems rather modern and civilized in here. I have been to bazaars and souks in Morocco and they seem to me much more frenetic and perhaps a bit more authentic than this one in Istanbul. Still, it is very interesting to check out the colorful maze of storefronts and stalls.
The Spice Bazaar (also the Egyptian Bazaar or Misir Carsisi), between the Grand Bazaar and the Galata Bridge, is much smaller but more fragrant and perhaps more exotic than its big brother. Located next to the Yeni Camii, the Spice Bazaar has an L-shaped layout and six entrances. A stroll through here is quite an experience for the eyes and the nose. Both the Grand Bazaar and the Spice Bazaar are closed on Sundays.