The city looks nice, and seems safe, but it isn't. I was just robbed in broad daylight in a tourist-frequented area by two robbers who stole my camera with over 250 vacation pictures from Quito, the Andes, the Galapagos, and of friends who I met. They threatened my life, then grabbed the camera from my neck. Luckily the strap broke or I would have been seriously injured.
This is not a safe town. Do not carry more money than you need. Do not carry your passport or credit cards. I made the mistake of wanting to take photos of the town. Locals said the robbers have been working the area for a while, but obviously the police haven´t stopped them. Most Cuenca residents seem very nice, but all it takes are small groups of robbers roaming the streets to make it unsafe for everyone.
I am quite upset and would like to cancel the last few days of my vacation, but that would cost me about $1k extra for another flight, so I am being very careful about where I go and what I do.