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How is Madeira in January? And where to stay?

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We (a couple around 30y) are thinking of going to Madeira for one week in January. We have never been there before. It really looks beautiful - but we are quite unsure about of how the weather will be?
We have been many times to the Canary Islands in January. I guess we can't expect the same amount of sunshine/temperatures on Madeira compared to Gran Canaria? But still it would be warm compared to the winter in Northern Europe.
Can anyone advise us about going to Madeira in January?

And we don't really know where to live on the island. Would you recommend to live in Funchal or would be better to find a quiet place/small town at coast.
All recommendations are welcome

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