You've received some very good suggestions. Wat Doi Suthep is a MUST, and while in that area overlooking the city you can visit the PhuPing Palace, one of the Thai Royal Family's several residences. It can be visited only during certain months when the family is not there. The day I visited there were many upper class Thais there, very few western visitors. You pay at the entrance and pay a little extra to ride an electric golf cart around, stopping at several spots to walk around and take photos. It made me think of Camp David, with rustic cabins, a lake, gardens.
There are several good hotels in the Night Market area, my favorite is the Imperial Mae Ping (suggested already). I paid $37 last year, the rate included the very nice breakfast buffet and all taxes. Tamarind Village is a compound located inside the Old City walls. It has become very popular and I was unable to secure reservations there, so book ahead if you want to stay there. I walked around the hotel grounds, very very nice. Do try "La Villa Pizzeria" near Tamarind Village, in an old wooden house with ceiling fans and lots of nineteenth century atmosphere.
Do sample the spas, especially the foot and Thai (clothed) massage services. There are two locations for Let's Relax in the night market area.
Shopping is better at the Worowot Market, during the day, than at the night market. The surrounding streets are full of flower markets, clothing, etc. There is a multi-storey western-style indoor a/c mall near the airport (can't remember the name) with large sections of shops for tourists. The prices are pretty good there and it's great for one-stop a/c shopping. The fast food places in the mall are great, no English spoken, point to what you want on the menu.
Chiang Mai is definitely worth at least 3 full days, busy but not frenetic like BKK. I rode tuk tuks everywhere, about 40-50 baht per ride. On my departure the hotel couldn't find a taxi (rush hour) so I took a mad tuk tuk ride to the airport, certainly got my adreneline pumping.
