The old Medina of Fez is not to be missed--truly an extraordinary place.  If you ever want to feel completely out of touch with the western world, this is the place to go!  Get lost in the myriad of winding passage ways of this city that was born around 9AD.  Things to see: other than the locals living a completely different way of life, see the Western World's oldest university,  traditional open-courtyard styled houses, the artisans working on hand-made crafts, apothecaries, the outside of mosques (only Muslims are allowed entrance to most, FYI), fountains, shops, exotic architecture, and, of course, the carpet shops. 

Be prepared to do some fierce bargaining, even for items you never dreamed of actually being interested in--shop keepers can seem aggressive, but the bargaining is like a game, don't take it personal.  Ladies, please cover the old knees and elbows for an easier time.

I recommend hiring a guide to help you wend your way through the miles and miles of passage ways, but keep in mind that your guide will get a kick back for anything you spend at the shops he takes you to, and accept the inevitability that you will end up in a carpet shop.  No worries, though, just enjoy the tea & the hospitality and feel free to move on.  If you're into it, it's shopping galore, and somewhat affordable, too!