In Dali old town you will find tons of shops selling handicrafts, clothes, any sort of bracelet or necklace.
Actually the only thing a bit hard to find are postcards you'll find them just in the post office or in a travel agency of old town, at least I did not find them anywhere else.
What to buy: The only thing that really caught my attention were kid's clothes, they were so many and so different colours, but as I do not have, nor plan to have kids, I didn't buy any.
What to pay: depends on your bargain skills, but I sae people getting some for less than 10 euro.
Due to its close proximity with Burma (Myanmar), there are plenty of jade shops found in this area. However, nobody bought any jewellery in the shop due to the unknown quality and honesty of the shop.
Dali is a good place for souvenir shopping of all kind. Especially famous is the Dali marble. Lots of shops sell different marble products like figurines, household goods or pictures. Compare prices and bargain hard, prices can vary considerably.
What to buy: Pictures for example are sold in all sizes, from very small (20x20 cm) to very big (e.g. paravents that are 2 m high)
What to pay: We bought two pictures, size 20x30 cm for 100 RMB each.
The Bai people are an interesting bunch of businessmen. They give you the impression they want the business badly, and hence offer a big room for you to bargain to get the best deal.
What to buy: The plant-dyed cloth : from RMB 4 (the smallest one). You can use it as a scarf, a bag, a table-cloth, a curtain, a ceiling, and endless other things you can imagine.
A pair of mid-size yunnanese souvenir shoes (with the cloth sticking from the back, making this one the 18 strange things about Yunnan) - from RMB 3 per pair.
What to pay: Bargain your way down nicely with them. They are very hospitable people, so shrewd but don't be rude.
On the street
What to buy: Bai people are so artistic. They make these amazing embroidery and sell them as souvenirs. They are so exotic to me! But don't forget to haggle with them. Don't forget this is China!
What to pay: varies... depending on what you buy
What to buy: Dali is the home of Bai people. And Bai people are the very skilled tied dye makers. They produce these amazing tied dye in variety of colours and patterns. Even if you don't buy, it is fun just to look at. The tie dyes are made into different products for sale too.
What to pay: varies
This was one of the few bookstores in China I came across that had a decent selection of English books. Perfect for everyone who's out of reading, or wants to pick up some good Chinese history books (or any other kind).
What to buy: An interesting history is "Mao Zedong: Man Not God" by one of his former bodyguards. He definitely has a certain slant, but it gives a good second opinion on a lot of debateable episodes in Mao's career.
What to pay: Maybe 30-40 RMB. Nothing outrageous considering their the only shop in town (and probably the whole province).
There're many kind of handbag shops on the street. The bags all made by hands. Beautiful color with fine embroider are sold with very expensive price, of course.
Lots of strange and exotic snacks can be found along the streets within ancient town section of Dali. I bought some sour dried prunes and candied dried roots.