There are shops at the bottom of the Kashgar International trade building, facing the main sunday market.
See the picture, which shows a glimpse of the main sign. You could just also ask anyone at the Bazaar.
What to buy: You should atleast buy one good rug. These are handwoven made locally, although I also got one form as far as samarkand. For about $100 you could get a very beautiful rug, and if you invested up to $500 I'm sure you could buy a rug that would be worth atleast $2000 US. The carpets are simply astonishing, especially the large silk floor rugs. They are luxurious.
What to pay: as low as $50 to as high as $2000
Make sure to stop into one of the several music shops in the old town. They carry some great , unique handmade instruments - which most of the shop owners will gladly demonstrate for you.