I must respectfully disagree with one thing BB said: Toledo as a day trip. Listen: Toldeo can be wonderful, or a miserable mess overflowing with crowds of tourists. The best way to ensure Toledo is a miserable lowpoint to your trip is to - get ready - do it as a day trip from Madrid. Because EVERYBODY does it as a day trip from Madrid. It's close, it's easy. So - surprise! around 10 am every day, the train doors open, the busses roll up, and disgorge 10,000 day-trippers, where they clog the streets shoulder-to-shoulder until 4 pm, then the human tide recedes, leaving the town delightfully empty and magical. Most people make this mistake, and it's easy to understand why: they have booked a hotel in Madrid for four or five days or some stretch, Toledo is a short train/bus ride away, and it's easy enough to get there. The problem is that everyone does that, and that (at least to me) completely ruins the experience. If you arrive mid-afternoon, you will see the packed streets, but you will then see the crowds disappear, leaving a beautiful, intact, charming medieval hill city, all to you and just a relative handful of smart visitors to enjoy for the late afternoon hours and into the night. Sleep in the old center. Get up early and go out and enjoy the city again for a few hours. Because around 10 am, the hoards will be back. That's when you should make your getaway. The downside of this plan? You have to pay for a night's lodging in Toledo (not excessively expensive, but a minor splurge compared to Madrid where there's oodles of competition and lower prices). The benefit is that you get the city at its best, instead of its worst.
Couple years ago, family members were going to Spain. They had Toledo on their list. I gave them the advice above, and implored them to be smart and spend the night in Toledo. Yes, I explained, they would have to spend a few bucks more for the night spent in the old center, but for that they would get an experience that would be one of the highlights of their trip, rather than something they wished they had skipped. I stressed that it was well worth the small extra cost - how many times you gonna go to this corner of the world, I asked? They agreed, it would be a smart move.
After they came back i asked him about his family's trip to Spain. "Oh, Spain was great...well, most of it" Did you go to Toledo, and did you like it? "Oh, we all hated Toledo", he said. "It was miserable. It was so crowded, we just wanted to get out of there!" I asked if they had spent the night as I suggested. "Oh, no - we saved some money by doing it as a day trip - we all wished we had skipped it and gone somewhere else instead." D'oh!! (facepalm...). True story.
I'm sure some here will disagree. But in my experience, the places that are being loved-to-death by mega-crowds of tourists (Toledo...Mont St Michel...Carcasonne...with the current explosion of worldwide travel, there's a long list), these places are best in the early and late hours, and it's best to skip them in the middle of the day. It's worth a few bucks more to sleep there and enjoy them when you have them more or less to yourself. Just my 4 cents. Good luck.