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Sultanahmet: This is the old city on the Europe side. Everything for the tourist is all here. The Blue Mosque, the Grand Bazaar, Hagia Sopia, Bus City Tours and tourist shops. The people in this area are mostly tourists. However, this area is very quiet in the evening particularly after 11pm. This area is the most pricey in Istanbul so expect to pay Europe prices for most things. A cup of coffee is £3.00 (4 Euro), a small coca cola is £2.50 (3.50 Euro), a basic pizza in a restaurant is £9.00 (12 Euro). Most of the sights are gathered around Sultanahmet Square within walking distance. The nightlife is in Taksim which you will need to access by Taxi after 11.00pm (when the tram stops running). A Taxi will cost you around 25TL to Taksim from Sultanahmet.
Taksim/Beyoğlu: This is the trendy area of Istanbul. This is where the cool trendy youngsters, professionals and students 'hang out' . Think Knightsbridge in London/SoHo and Times Square in New York meets the East. This is where your high end shops, 4 star hotels and high street shops are. You have McDonalds, Starbucks, BurgerKing all here.
Beyoğlu is the area along Istiklal street, starting from Taksim square to Tunel square. Lots of trendy/high end bars, trendy clubs, cafes and restaurants. If you are under 35 and/or looking to have some good evenings out then Taksim would be a great place to stay. Downside is that the sights in Sultanahmet will need to be accessed by tram/taxi/metro. Tram costs 4TL (or 1.95 TL if you have an Istanbulkart, which costs 6TL) each way.
Kumkapı: A small neighbourhood famous for Turkish taverns (meyhane in Tukish) serving sea food which is also hosting wholsale fish market. Popular and crowded during evening for dinner.
Kadıköy is a major traffic hub and middle-class residential area on the Asian side. From there you can take a romantic ferry across the Bosphorus to the historical peninsula (where Sultanahmet is) or to the area where Taksim is located. Kadıköy itself has an extensive pedestrian precinct, many cafés, restaurants and shops and a vibrant market quarter. It is great for people-watching, hassle-free shopping, a stroll along the Marmara Sea, and further exploration of the Asian side. Kadıköy is becoming a hotel/hostel/holiday flat area in its own right.