The Old City is that part of Jerusalem surrounded by the Ottoman city walls and representing the heart of the city historically and spiritually. In a city already divided, the Old City is further divided culturally and historically into four Quarters: the Jewish Quarter, the Armenian Quarter, the Christian Quarter and the Muslim Quarter.
The Old City is accessed by means of a number of gates in the Ottoman city wall, the most popular being Jaffa Gate on the western side of the city (access from West Jerusalem) and Damascus Gate on the northern side of the city (access from East Jerusalem). Jaffa Gate has a large taxi rank for easy access in and out of the Old City. Much of the Old City is only accessible by walking, because of very narrow streets and steps in the road. This is not a great inconvenience because the Old City is only about 1 kilometer across.
Despite its small size, or perhaps because of it, the Old City is amazing. You do not need to be Jewish, Christian or Muslim, or to be overly concerned with religion, to be overwhelmed. Anyone with a sense of history, spirituality or the human species will be absorbed by the tremendous weight of human civilization that cloaks every meter of the city. It is an occupied, living city and not a deserted museum or monument. The passion play that is humanity has been in constant revival at this location for most of the length of recorded history, and they keep re-using the same props for as long as possible.
Imagine the coolest bar in your city. The one that for the last 20 years has been hosting the hottest, most innovative, most classic artists and musicians to come through town. The bar where the fifty year old bartender with the Jerry Garcia hair, nose ring and 25 year old partner can point to a gouge on the counter and honestly tell you that Jimi Hendrix made that with his guitar one night while falling down drunk. Now imagine that the bar is 2500 years old and been going strong the entire time, including tonight.
That's the feeling of ancient Jerusalem. Don't get the wrong idea though - there is no night life in the Old City...but there is just outside its walls.
The holiest site in Judaism, the Western Wall dates from 2000 years ago. It marks the western edge of the Temple Mount, where the holy Jewish Temple was located before it was destroyed, and where, long before that, the prophet Abraham apparently demonstrated his devotion to God. The Temple Mount is occupied by the third holiest site in Islam - the Dome of the Rock and the Al Aqsa Mosque. This leads to the current difficult situation, where large numbers of Jews and some Christians pray at the Western Wall. If they ventured onto the Mount itself, a religious conflict of monumental proportions would break out.
Many supplicants at the wall insert written prayers into crevices between the large stones. While the wall is outdoors, it acts as a church and synagogue with a never-ending crowd of worshippers. You can view the Wall from a reasonable distance without disturbing those praying at the Wall, and without making a traveller stand out as an inconsiderate goof.
Dark, somewhat confusing, and decrepit, the Holy Sepulchre holds more historical value than spiritual value for most people. Marking the site where Jesus Christ was believed to have been crucified, it has a fractious history that has shaped its architecture. This history continues to the current day, where the Holy Sepulchre is controlled by several different branches of the Christian Church, who have historically been somewhat at odds with each other. Thus, its historical value is as a demonstrative monument to the highs, lows, and internal disputes in the history of the Christian Church.
The start of the Via Dolorosa isn't marked very clearly. There are perfectly reasonable reasons why this is so, having to do with the Old City's well occupied state, but they are hard to explain until you visit. With a decent guide book, it isn't hard to find the rough beginning of the Via Dolorosa, and usually plenty of people hanging around in that area can point you to the exact starting point. Many of these people will give you a tour along the Via for a small fee, accompanied by informed commentary, but this is not necessarily the best plan. Paying a token amount to get yourself started is not a bad plan, but if you have a guide book you can likely handle it better on your own from there, due to the crowded and winding nature of the Via through the Old City's narrow streets. As well, not all the guides are as respectful of the religious sites along the Via Dolorosa as they could be, sometimes walking headlong into occupied churches in mid-service.
The Suq El Attaria is the primary shopping area in the Old City. You will find shops ranging from souveniers to greengrocers to traditional clothing.
Jerusalem is known for its Armenian Ceramics. With white and a rich blue as the base colors, and bright paintings on them, they are a distinct souvenir. The street signs throughout the old quarter are made of Armenian ceramics, and a few shops will produce custom nameplates and tile signs with a short turnaround time. See http://www.armenianceramics.com/ (where you can also order online)
Throughout the Old City, street vendors offer many varieties of local foods, like falafel and shwarme (barbequed meat skewers).
The highlight of the Armenian Quarter is the St. James Cathedral. There is also a small and interesting museum in the quarter, as well as a library and many other community structures.
Armenian Patriarchate Website - http://www.armenian-patriarchate.org/
Cafes offer the thick, dark Arabic style of coffee. The locals gather here and play backgammon.