I was there 3 years ago at the tail end of a 4-month trek through C. America. It was a pretty nice city - reminded me a bit of Miami (again, this was after 4 months all over C. America).
I was 22 at the time, so depending on your age, your itinerary might be a lot different than ours was. We partied quite a bit, went to the Panamanian soccer championship, ate some really good sushi (surprisingly) and rode through the Canal on some Kiwis' yacht.
The Canal is impressive, but we had a pretty unique experience - we hung out around the docks and eventually found some people who needed to hire line-handlers, which are required for passageway through the Canal. So we got to ride through the Canal (an all-day trip) on a personal boat. I have no idea what it's like to see it in any other way, but I think it's supposed to be pretty cool. They've got a museum and some sort of tour, I believe.
It's a trek from Panama City, but Bocas del Toro is pretty awesome. It's a Caribbean archipelago near the Costa Rican border, but you can fly there. Definitely laid back and very pretty.
One word of caution - Panama City was the one place we were mugged in all of our travels. I never felt in any danger and I think it was a pretty isolated incident, but some kids stole some cameras and my friend's purse from us when we were on a bus. I chased the kid off the bus and into an alley, but it was a pretty rough neighborhood and I decided to chalk it up as a loss.
The best thing about Panama is that they use American dollars, but insist upon calling them Balboas.
I know a Canadian guy on another board who just spent some time down there earlier in the year. I'll PM him a note to see if he can help with your question too.
Great idea. I had work there last spring, so my wife came down for the weekend. We stayed at the Bristol, which was excellent, with a damn good restraunt, and we went out to the new Intercontinental resort for a day by the pool and on the beach, that was excellent too.
You should visit the locks of course, also the very old pre-hispanic ruins Panama Vieja, and also spend some time walking around and have a meal in the Casco Viejo neighborhood. It's the old spanish part of the city, great architecture, being gentrified now,lots of good food, shops, etc. Kind of like the French Quarter without the drunks.
Cool fact, feel free to drink tap water anywhere in the city, totally clean, better than most US cities, courtesy of the US Corps of Engineers.
Totally forgot about Panama Viejo. Definitely a really cool part of the city, with awesome architecture. We spent a lot of time walking around there, sipping on drinks, and eating at restaurants.
We stumbled into the "local" part of Panama Viejo and it started to pour, so we ducked into some dive bar. It was filled with old men, smoking cigars and betting on closed-circuit horseraces. So much fun.
We were warned about the Viejo district being dangerous, but it didn't seem that way to us. It was not the part of town we got mugged in.
Just to get clear on the terminology, so you don't get in a cab and end up in the wrong place:
La Panama Vieja - Pre-Hispanic ruinsin a small national park, outside of town on the airport end, should take an hour or two to tour, nothing much else to do nearby.
Casco Viejo - Old Spanish colonial part of town, French Quarter without the drunks.