Transportation to the main touristic attractions is quite easy. I would recommend staying in a hotel not to far from the downtown area (neighborhood: Baixa). From there you can pretty much see all the surrounding sites in one day (castle, the Santa Justa elevator, the cathedral, etc.), and the next day you can go to Belem (neigborhood about 20 minutes away by tramway) to visit the monastery, museums, another castle, and the river side, etc. As for the restaurant selection, I did not experience bad food; they were all good. Just don't visit the ones in the touristic areas; if you go to Bairro Alto you'll find some very good ones for instance. Compared to the rest of Europe, Lisbon is cheap.
Portuguese are not necessarily the most social, somewhat similar to Catalans, when it comes to the service industry (tourism, restaurants, public transportation, etc.). However we did meet some very friendly people and unlike the Spanish, most Portuguese speak English. One interesting note is that for some awkward reason all the drug dealers were chasing me to sell some of their "stuff". I don't know if it's because of the long hair, or the fact that I hadn't shaved that day, or the puffy eyes (lack of sleep...I told you there was too much to see) but I have never been so harassed in my life...they'd actually cross the street with me and continue whispering in my ears. One even offered to educate me about the BENEFITS of drugs, for free!! Awkwardly these guys are quite knowledgeable when it comes to speaking languages; no matter what language I would switch to (to make it clear that I don't speak their language), they'd follow. I guess being a translator doesn't pay as much.
Basically, Lisbon is a great city to visit, and this trip really made me want to explore Portugal further. If you are wondering between Lisbon and Prague, this might be shocking, but I'd recommend Lisbon. I truly believe the city is underrated; but then again, I don't want to boost your expectations. However, I can say you will not be disappointed. In winter might be better as there are less tourists and the weather is very acceptable (around 15 celcius), however in the summer you'd be able to also enjoy the beach...
Here are some pictures.
JP