No trip to Old Town would be a trip to Old Town without walking up and down historical King Street. It begins at the waterfront of the Potomac river, and is lined with brick sidewalks for a good 10-15 blocks. Every kind of restaurant you could imagine can be found, from the Fish Market (see my Fish Market entry) on one end, to Las Tapas (see my Las Tapas entry) on the other. Sprinkled in between are some of the coolest and most original shops that you'll ever see.
One of my favorites is the Hats in the Belfry hat shop. I don't know how they stay in business, cuz most people just come in to try on the cooky hats and laugh. But it's a must-see on your walk. Try on the Cat-in-the-Hat hat, or a Viking cap. There's always something new. And, they have your generic hats-you-wear-everyday as well.
While I can't remember the names of all the shops, you can see some of the most unique trinkets, cool gifts, and fun items. Another popular shop is one that sells t-shirts with some very funny sayings -- most having to do with the DC area and politics or whatever is topical in the world.
While you walk away from the waterfront, you'll pass the historic visitor's center and courthouse.
It's pretty easy to get lost in your imagination, thinking you just might see George Washington come around the corner with Martha. (His estate, Mount Vernon, is a few miles down river.)