What is the best town to stay 2 nights in Algarve?
Faro or Lagos, your choice with Faro having a slight edge.
If you can worm in three nights, make it Albufeira instead so you could make excursions in both directions.
For Algarve we like Quarteira - a bit smaller and less touristy than Albufeira.
Salema is still Rick's favorite, although a newer part of town has sprung up to accommodate more tourists.
Suggest Apartmentos do Parque in Olhos de Agua - small town just east of Albufeira so central for touring around the Algarve. And, the town of Olhos de Agua has managed to maintain some of its fishing village atmosphere which many other towns have not done. Apartmentos do Parque is perfectly located close to town and it's many great restaurants, has great views over the ocean and the beaches, large 1 or 2 bedroom apartments with kitchen, sitting area & deck, and the staff are very helpful and knowledgeable. There is a heated swimming pool - a rarity in the Algarve. And, finally, their rates are very good during shoulder seasons. Highly recommend it.