I was there for two weeks a few years ago. I usually worked in Sao Paulo, so it was a nice break from the norm. I think the city has a large tech industry and its hard to get a job there. The reason is its a nice place to live. Clean, low crime, beautiful scenery. The beach is nice. I would consider it a nice place to live, but as a tourist destination I'm not so sure about. But then again, I think I was there in July (their winter), so it wasnt as active as it is during the summer. I have heard it is a popular place in the summer.
I would recommend going to Lagoa da Conceio. At the marina, you could get a boat to take you across the lake to an area where they had a few restaurants and shops and stuff. I wish I could be more descriptive, but I spent a great saturday afternoon there drinking beer and eating shrimp on the dock. I'm sure someone at your hotel, or a local would be able to point you to what Im poorly speaking of
There is also some artsy - hippy area / market we spent some time at. It was interesting to walk around.