1) Reference travelling to the Algarve, checkout this post I've just made to my blog about public transport between Lisbon and the Algarve.
http://barlaventostravelblog.blogspot.com/2009/01/lisbon-to-algarve.html
2) If you are taking a bus to the Algarve make sure you get a Bus to Albufeira Bus Station and not repeat not Vale Paraiso. There may not always be taxis at the bus station, but it is not impossible to walk to the old centre from there, but not recommended.
3) In regard to a "beautiful area" be aware that Albufeira is more "tourist/party heaven" rather than a destination for a relaxed break.
I am biased but I live in Lagos in the Western Algarve which I think would fit your needs. We have beautiful coastlines, a great small historic town with a traditional centre. It is a bit of an independent travellers destination so there is a bit of bar/party life as well.
