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I've been to Corfu on holiday twice and both times I've chosen to use Paleo for my base.
If you're looking for a wild party atmosphere you won't find it here but if you're looking for gorgeous scenery, stunning beaches and a bit of tranquility look no further.
There isn't that much to Paleo, just the usual supermarkets, occassional tourist shop, a camp site, numerous tavernas and a good helping of bars and of course the monastery which is located at the top of a hill and gives a great panoramic view around the various little bays and inlets. There is also a spot called Bella Vista, halfway up the hill which is a definite photo opportunity which shouldn't be missed.
The water is crystal clear and ideal for snorkelling in. The main beach in Paleo tends to be a bit crowded (but not packed) and isn't the best of the available beaches. Your best bet would be to hire a car/bike (Nikos along the main road does a good deal on bikes)and head for Glyfada (I think that's how you spell it) where there's an amazing beach which tends to be almost empty a lot of the time - there's signposts for it all along the main road.
If you fancy more an upbeat night out head over to nearby Ipsos (about 10/15 mins in a car)which is a bit of a lower key version of Kavos. There's loads of rooms available for reasonable prices if you stay the night (call into the apartments to check or get your rep to sort something out).
Corfu town is well worth a visit and you can get there by bus which leaves every day on the main road and costs about £1 return - be warned though, the roads aren't the best and the bus tends to be busy and hot so you may be better off hiring a car or bike.
Food and drink are really cheap and you can get a three course meal for two people for around £10 which is a bargain. The choice of food available is amazing, from traditional Greek to Italian and even a couple of English dishes.
Not many tour agents tend to do packages to Paleo but the one's I've found that do are Manos and Olympic (Manos is slightly cheaper). Be warned that there tends to be a bit of a wind around the end of May/beginning of June but it won't ruin your holiday.