Two things jump out at you as you arrive in the old town of Brasov, the second-largest city in Romania. The first is the beautifully maintained Gothic architecture that enfolds you, and which lurks down every side street and surrounds every square. Old town Brasov is a stunning place, and it is immediately clear that a lot of money is spent keeping it as unspoilt as possible, which makes the second thing you notice, the big white Hollywood-style Brasov sign in the surrounding hills, so jarring and incongruous. Evidently, the people of Brasov awoke one morning last decade to find that the sign had been erected in the night; such is the beauty of this corner of Transylvania, however, that the sign seems to add to its charm.

We stayed in the Rolling Stone Hostel, about a 15-minute walk from the centre of town. It was an adequate place to sleep and nothing more; and it was so overcrowded its dorms were more like refugee camps. We originally chose a six-bed room with an en suite bathroom, which was only half true: there was a toilet and shower in our room, but it was only one of three in the whole building, which made our room a busy thoroughfare.

There were often people whose bookings had been lost sleeping on the sofas in the lounge area, and halfway through our stay we had to move to another room to make way for another booking, despite the fact that we had also booked; arriving home that night to our new room we found someone sleeping in one of our beds. On top of all this, the hostel claims that it is the only hostel in Europe to have a jacuzzi, which, when we were there at the height of summer, was empty of water, and being used as a storage place for bikes.

However, the hostel did offer some very reasonable tours, and the first one we took advantage of was the bear watching, for 20 lei per person (about six euro). I had little idea of what to expect, but anticipated some sort of midnight walk through a forest to sit in a hide and catch a few stolen glimpses of the furtive bears, which I imagined would be around the size of a large dog.

Instead we were piled into a people carrier and taken to a rather less-than-salubrious part of town, where we parked in front of some open wheelie bins. The street was busy, with cars and motorbikes speeding past pretty constantly, and after half an hour I began to think I had been ripped off. Just when I was about to insist we turn around and go home, an eight-foot brown bear wandered into view just across the street and started rummaging through the bins, giving me and everyone else in the car the fright of our lives. We saw four bears in total that night, each quite calmly eating rubbish in the middle of an urban, residential area.

Back at the hostel, we were told that two weeks previously, an Irish tourist had been eaten by a bear, and the city had tracked down and killed what it thought to be the culprit. I'm not sure how much credence to give this story, as we were also told that after the bear had been killed its cubs could be heard crying all night, and that it was later discovered that the bear was a vegetarian, so it all sounds like a bit of a shaggy dog story. However, the bears certainly pose some risk, and it is a little astounding that refuse collection in the poorer parts of the city is so bad that potential man eaters are wandering the streets.

Aside from bin-raking bears, which I guess are the Transylvanian equivalent of the urban fox, Brasov has plenty more to offer. Another tour organised by the hostel took us around to the two best castles in the area, Bran and Peles castles. Bran Castle makes much of its tenuous Dracula links, and looks satisfyingly spooky; you can imagine the Impaler spending his undead years here, although there is little historical evidence to connect him to the place. This small fact has not stopped a thriving market of tat nestling in the castle's shadow, and I am proud to report that I gleefully parted with 15 lei in exchange for a Dracula snow globe of such appalling ugliness that I am torn where to display it best back at home.

For all its chilling Gothic exterior and breathtaking views over the surrounding countryside, the interior of Bran Castle is fairly dull. The place teems with tourists, and you are carried through by a tide of coach parties and sightseers, so it's almost impossible to get a sense of the place as anything other than a second-rate museum.

Peles Castle, however, built by the first king of Romania, King Carol I, is breathtaking and well worth a visit. Here the only way to look around is by guided tour, and our particular guide was so bored and disillusioned by his lot that it was easy to forget the sumptuousness of our surroundings.

But the castle is truly spectacular. The reception room is girdled by what looks like a painted frieze, but which, on closer inspection, is made up of a mosaic of different coloured pieces of wood, fitted together like a wonderfully ornate jigsaw. Set in the hills of Sinaia, a mountain resort now so developed as to seem almost on the verge of collapse from impossibly large, gleaming hotels, the palace itself is breathtaking. From outside the views are augmented by the gardens filled with statues, and such is the openness of the area, you could almost forget the presence of hundreds of tourists.

If you are feeling like spending a day on foot, there is plenty in Brasov itself to amuse you. For just 10 lei you can get a cable car up the hillside to the Brasov sign. At the top there is a cafe, although bafflingly it is built on the side away from the hills and so has no view. Five-minutes walk, however, takes you to right behind the big white letters and to a wonderfully vertiginous viewing platform. Looking down from such a height gives you a real sense of quite how pretty Brasov is. The town is all red, steeply sloping roofs, punctuated by the odd silver domed church. Over the other side of the valley, the Black Tower and the White Tower keep watch over the town.

The largest building in town is the Black Church (the Biserica Neagra), which also happens to be the largest Gothic church between Vienna and Istanbul. It was built between 1385 and 1477 and got its name when the Great Fire in 1689, which laid waste to the surrounding town, blackened the walls of the church. The church houses an enormous organ, one of the largest in Eastern Europe, with more than 4000 pipes. Every Tuesday and Thursday there is an organ recital, and for only five lei you can sit in this ancient structure and be enveloped in deafening music. It's an eerie quality of an organ recital that, although the sound seems to come from all around you and fill every available space, the person playing the organ is hidden in the loft.

My knowledge of classical music is limited, but I am dimly aware that you do not applaud between movements. I therefore took my cue from those around me, but it seems everyone had the same idea, and by the time we all realised that the recital had finished, it seemed too late to clap, and so we shuffled out in silence.

Brasov has a vibrant cafe culture, with well appointed outside seating running the whole way down the centre of the main pedestrian drag. I recommend you find a comfy seat late afternoon and enjoy an Ursus beer. This delicious Romanian beer tastes slightly of honey, presumably to appeal to its eponymous bears. When dinnertime comes, go to the Cafe De L'Arte, tucked away in a side street. We did, recommended by a local, and I had the best onion soup I have ever tasted, washed down with more Ursus.

Sadly, even in the height of the tourist season, the cafes all close at about 11pm, and beyond that there is very little nightlife in Brasov. We contemplated moving into the newer parts of the city, but, possibly due to one too many bottles of Ursus, we worried about being attacked by the bears, and headed home to our hostel, which, in the dark, seemed more than ever like the sort of place you would sleep in if your home had been destroyed by a flood.

Brasov is, however, a city to be enjoyed in the daytime. The locals are warm and friendly, and one never feels like they are at all jaded at what a tourist trap their town is. If anything they, and Brasov itself, seem to thrive, and you are left with the impression of a welcoming town where old and new co-exist in perfect harmony.