I've just returned from a 10-day trip to Cuba and I must say that the misery and decay I encountered in Havana (Habana Vieja) exceeded my expectations by a wide margin. From above the city looks like after an air raid...

{Lunch at our hotel, NH Parque Central}

...and from the ground, it doesn't look that much better:
Havana has two markets. One for Cubans, who pay with pesos, and one for tourists who pay with "pesos convertibles" (1 CUC = 1/0.9 USD = 1/1.3 EUR). The latter offers hotel rooms, gastronomy, good cigars, cabs, and souvenirs (interestingly, often made out of Coke-cans). Prices are the same as in developed countries and are actually even higher when adjusted for quality. When it comes to food, there aren't too many items I'd recommend. Salad is tasteless and beef is unchewable most of the time. So you'd better stick to fish. Cohibas are a bit cheaper than abroad, except if you live in tax crazy Canada.

The market for Cubans is a dispersed fleamarket. Even the "big" stores look like closed stores with a couple of items forgotten in the window. I highly recommend not visiting a local butcher: You wouldn't feed your dog with that stuff.
Résumé of La Habana: Being in a pool on the roof-top of a hotel with a view over Habana has some charm. But when going outside there is not much to do and you'll soon be annoyed by all those people offering cheap cigars and CDs with Cuban music. One can easily get the impression that the whole town is a tourist rip-off: Paying more for a cab ride or a Mojito as you would in your home country and being expected to give a tip worth more than a Cuban earns per day made me angry.

Unfortunately, Cubans don't have access to "world news" (no foreign newspapers, no internet, no satellite dishes), so the people I talked with were actually quite happy with their situation ("We don't earn much, but as opposed to other countries education and health care is for free!" (translation mine)) and couldn't see that people in developed countries who are considered as dirt poor have a way higher living standard (I didn't have the impression that they were afraid to speak openly).

The rest of the trip I stayed on the beach in Varadero, a tourist zone that is closed for Cubans (only those who work there can enter). The hotel was really nice (Iberostar Varadero) and the service was excellent. In case you like being on the beach and food and a fast and cheap internet connection isn't your highest priority, it's the place to be.

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