For the most beautiful decor on the island, the place to stay is the Capri Palace (formerly known as the Europa Palace, and still called that by residents) in the hilltop village of Anacapri. The exterior is nondescript, but the interior was recently redone in white on white the Urnbrian stone floors, the sink-into couches, the canopy beds draped in fabric. Breaking up the all-white scheme are rarefied accent pieces: a curved, gilded 18th-century gate over the reception desk; a sprinkling of Louis XVI tables; an 18th-century Parisian carriage seat; gold Venetian sconces; and a rotating collection of contemporary art. The best of the new style is the Acropolis Suite, with a bath overlooking the sea. There are also four suites with their own pools facing Mount Solaro, an extensive spa (best masseur: Salvatore), superlative service spearheaded by suave owner Tonino Cacace, and privacy. You can helicopter into town from Naples, avoiding the crowds decamping the hydrofoils in Capri's Marina Grande. $250-$1 ,409. (Via Capodimonte 2, 80071 Anacapri, Italy; 39 -081-837-3800; Anacapri, while it does get some day-trippers in the small square, still feels like a quiet village. Its shops are of the artisan variety (as opposed to the status symbols lining Via Camerelle in Capri). The following two should not be missed. Tina Mariniello, who has been crocheting and knitting for 40 years, opened Pizzi e Merletti three years ago. The shop sells her hand-embroidered table linens and delicately stitched baby clothes. From $13 for socks to $227 for a threepiece outfit. (Via Giuseppe Orlandi 189, 80071 Anacapri, Italy; 39-081-837-3953.) There are sandal shops everywhere in Capri, but rarely do you find one like L'Arte del Sandalo Caprese.The craftsmanship, style, and sardonic wit of owner Antonio Viva, an artisan for 45 years (his designs have graced the feet ofJackie O. and Sophia Loren), are incomparable. His shoes come ready-made, but if you're willing to wait-at least a month -he'll measure and cobble to order. $40-$120. (Via Giuseppe Orlandi 75, 80071 Anacapri, Italy; 39-081-837-3583.)
In Capri, you'll want to stop in these jewelry shops. At La Perla Gioielli, the refined settings for precious stones are at once classic and fresh. $500-$132,000. (Piazza Umberto I, 21, 80073 Capri, Italy; 39-081-837-0641.) Behind the piazzetta, Grazia Vozza Gioielli sells necklaces of aquamarine, jade, amber, and peridot, along with freshwater pearls. $45-$2,272. (Via Li Campi 22, 80073 Capri, Italy; 39-081-837-4010).
Go to the Blue Grotto by private boat in the early morning or from 5:30 p.m. to just before sunset (avoid high-tourist hours between 9 am. and 5 p.m.).You can swim through the opening in the rocks (be careful of high tide and strong currents). Or have Roberto Salvia, one of the rowboat operators who cluster outside the opening, row you in (your hotel concierge can arrange this).
Listening to him sing inside the grotto is an experience you'll never forget.
For drinks with a terrific view of the Bay off Naples: the cliffside terrace of Hotel Caesar Augustus (Via Giuseppe Orlandi 4, 80071 Anacapri, Italy; 39 -081-837-3395). Best (thin crust) pizza for lunch: Aurora (Via Fuorlovado 18, 80073 Capri, Italy; 39-081-837-0181). Best spaghetti and clams: Add'o Riccio (Via Grotta Azzurra 11, 80071 Anacapri, Italy; 39 -081-837-1380). Best new restaurant: Biberius (Via Sella Orta 10, 80073 Capri, Italy; 39 -081-837-0431), which has sophisticated dishes laden with seafood. $65. L.W.