This is a pretty good place to pick up those gifts for people back home, the prices are good and plenty to chose from. You can find t-shirt, and all those other goodies you like to bring home to the people you love to show them you were thinking of them while you were on vacation having fun without them.
If you like to shop and have time to kill there is the Niagara Factory Outlet Mall. Plenty of outlets from Nike, Addidas, Pfatzlgraf, etc. Every weekend Canadians make a pilgrimage across the border to this mall which is known for it's good prices. My girlfriend was estatic when she walked out with a suede coat for $40. Recently I was pretty excited to get a pair of Timberland boots for $35.
There are two duty free shops, one on each side of the Rainbow bridge.
Americans shop on the Canadian side, Canadians shop on the American side and tourists from other countries shop on which ever side is the opposite of their hotel.
Both are fairly large stores, offering a wide selection of items from candy bars to perfume.
Their hours are from 7am to 11pm.
What to buy: Like most Duty Free Stores, you need to know your prices. Just because it's 'Duty Free' does NOT mean it's the cheapest place to buy. Best bargains are normal items that are heavily taxed such as liquor and cigarettes.
The best buy I found was 'ice wine'. Real ice wine is a product of Canada, and this store had the best selection of ice wines I've seen in any duty free shop in the world. Also the prices were noticeably lower too.
In contrast to the falls themselves, I find the town of Niagara Falls nothing special - in fact pretty boring, industrial and ugly. But if you spend some time there and feel like shopping, the outlet center there is excellent, for me especially for clothes and books. It is actually really realy cheap there and I totally enjoyed myself.
What to buy: Everything, especially books and clothes.
What to pay: Little.