Chiang Mai, the largest city in northern Thailand, is rich in culture and traditions, markets, and festivals. There's a great choice of Chiang Mai hostels, guesthouses, and bed and breakfasts available all around the area. If you can, try to stay within the old city walls -- you are close to everything, and the evening traffic is quite light.
Getting around is easy and not expansive. You have many options for transport to and from your Chiang Mai hostel -- rent a motorbike or a bike, take a taxi, or, for a cheap ride, choose a tuk tuk (remember to negotiate the price for your destination in advance).
Shopping is great -- the city is home to ten shopping malls, at least fifteen markets, and many boutiques and stores selling handicrafts. For shoppers, the Night Bazaar is absolutely appealing, but the Sunday Market is even better -- here you can find an incredible range of products.
Eating out is a pleasure -- cheap stalls and restaurants are everywhere and certainly near Chiang Mai hostels. The Loi Kroh and Thaphae Gate area are famous among backpackers for the simple, good, and inexpensive food.
You may want to avoid Chiang Mai and this region of Northern Thailand during the "burning season" of February, March, and April. Farmers clearing fields with fire and other pollution sources tend to create a yellow smoky haze in the air during these months. The campfire-like smell may not bother everyone, and the hostels in Chiang Mai will likely be less full during this time, but you may want to avoid the area during this time especially if you have breathing problems.
There is plenty of sightseeing to be done here. Leave your Chiang Mai hostel -- start from the old city, full of lanes dotted with old temples; trek to hilltribe villages; ride an elephant at the elephants camp; relax at the botanical garden; and visit Doi Suithep National Park. At the end of the day, enjoy an invigorating Thai massage or try a relaxing oil massage.