I originally was planning on visiting the capital, Managua; but decided to go a bit smaller, and nearer to the lake. So, I went to Granada. This turned out to be a great call.
This is a cute little town, with wonderful architecture. The first day, you need to just walk around the center of town, especially the cathedral and square.
Next to the cathedral is a road that heads east towards the lake, this is where you will find many the restaurants and shops, and street entertainment in the evening. I had dinner along this street every night, at a different place. I even ate at an Irish pub (O'Shea's), with great Shephard's pie.
But, there is also the lake. You can fish out there, boat out, and take a ferry out to many islands where you can also stay.
I chose to kayak around some of the islas that are close to shore. There are over 360 islas on this lake.
On another day, it was fun to go up to the Mombacho Volcano that overlooks this town. If you have your own car, you can drive to the park entrance. The beginning of the park is as far as you will want to drive. Park here, and take their transport up. At the bottom, you have to choose your hike. They said "Crater" took 1.5 hours, so I chose that. Not true, it took just over 30 minutes. Next time, I would choose a longer trail. The fees are $20 for transport up (wirth it!). And $2 to $4 depending on which trail you choose.
A real treat on my last night in town was going to Masaya Volcano at night (entrance $10 per person - parking free). This is only about 40 minutes outside of Granada. I arrived at about sundown, and waited for the dark. The bubbling lava in the bottom was really neat to watch in the dark.
