To quote one recent traveler: "I’d rather go to Paleokastritsa than to Heaven." Considered by many to be the site of Homer’s city of the Phaeacians, this truly spectacular territory of grottoes, cliffs, and turquoise waters has a big rock named Kolovri, which the ancient Greeks said resembled the ship that brought Ulysses home. The jaw-dropping natural beauty of Paleo, as Corfiots call it, has brought hotels, tavernas, bars, and shops to the hillsides above the bays, and the beaches swarm with hordes of people on day trips from Corfu town. You can explore the idyllic coves in peace with a pedal boat or small motorboat rented at the crowded main beach. There are also boat operators that go around to the prettiest surrounding beaches, especially those to the south, mostly inaccessible except from the sea; ask the skipper to let you off at a beach that appeals to you and to pick you up on a subsequent trip. Many visitors also enjoy a trip on the "Yellow Submarine," a glass-bottom boat that also runs night excursions (reservations are recommended).
In the Paleokastritsa region, look for La Grotta bar, built grotto-like into the rocks of a tiny cove. A mini-Acapulco, the high cliffs here tempt local youths to dive into the turquoise waters—great entertainment as you sip your cold beer or cocktail.