Please see the following link on Google Maps.
http://bit.ly/9aOc1e
If you zoom out you will see the position of R. Jaime Bispo Palhinha in relation to Lagos Bay. Cerro de Mós is a residential suburb is situated on a hill behind Lagos.
There is a Modelo Supermarket about 5 minutes walk away. The old town is about 15-20 minutes walk away, but coming back uphill can be tiring particularly in Summer with the heat.
Equally, there are no beaches nearby within easy walking distance. I would suggest that a car is necessary.
The nearest Restaurants are about 10 minutes away by foot.