Like any resort of the Mediterranean type, most businesses in the Algarve operate reduced services in Winter.
Have a look at this link:
http://www.weather2travel.com/climate-guides/index.php?destination=albufeira
You will see that in December, average temperatures range between 9ºC and 16ºC. Weather can be clear but parky. The Algarve coast faces the Atlantic not the Med and so is open to Atlantic vagaries.
Flying into Lisbon will require a taxi to Gare Oriente train/coach station (ten minutes ride) and then either a train to Albufeira Station (actually 8kms from Albufeira) or a Renex Coach to Albufeira center.
You should allow at least five hours for this transit.
For links for timetables Have a look at the section entitled "Algarve & Portugal - Travel Transport Links" in right hand panel of my blog at
http://barlaventostravelblog.blogspot.com/
(Note winter timetables for trains and buses are not out till the end of September.)
As regards flights into Faro being expensive, it is likely that all flights to most European destinations will see price increases this winter as we see both Ryanair and Air Berlin announcing they are parking up planes over the season. Expect similar announcements shortly from Easyjet and others following the recent oil prices rises.
