As I fly into Istanbul, dreamily picturing a minaret-spiked city of steamy hammams, despotic sultans and indefatigable carpet sellers, it is somewhat jarring to realise that this fabled "Gateway to the Orient" is now also home to such thoroughly modern delights as Paul Smith, Wagamama, Krispy Kreme and Marks & Spencer. Famously set on the Bosphorus where Europe kisses Asia, Turkey's most engaging city has for centuries looked to the West for its cultural cues. Although the country has yet to gain admittance to the colossal funding junket that is the EU, a sign that this dream might yet come true is its recognition this year as a European Capital of Culture.
In the three years since Istanbul received this accolade, millions of Turkish lira have been lavished on the city to restore monuments, create new exhibition spaces and develop a year of arts-related events. Visitors and locals can look forward to a programme that will offer everything from dances by whirling dervishes and a world puppet festival to a modern ballet inspired by the 16th-century Turkish admiral Barbarossa and a stadium concert by U2. For many, a key draw will be the new Museum of Innocence, inspired by the novel of the same name by the Nobel Prize-winning Turkish writer Orhan Pamuk. Set to open in July, it will offer a poetic and documentary representation of daily life in Istanbul from the 1950s onwards.
If you've always fancied visiting this "City of Cities", still richly endowed with memories of the Roman, Byzantine and Ottoman empires, this could be the moment. You won't be alone, though. With over 12 million inhabitants - most of whom seem to be sitting in traffic jams of yellow taxis - and an abundance of sights to see, this is a metropolis where you need to cherry-pick. Fortunately, history has parcelled Istanbul into three distinct areas that all visitors should touch on in a short break: European, Asian and Very Old.
Most travellers begin in the last - the richly historic, cliché-fulfilling district of Sultanahmet that enjoys a commanding position on a peninsula set between the Golden Horn and the Sea of Marmara. However, I recommend making a soft landing first in Beyoglu, the core of the old European quarter. In the late 19th century its hills bloomed with international consulates, churches, schools, apartment blocks and grand hotels like the Pera Palas, where travellers arriving on the luxurious Orient-Express train from Paris would stay. Built in 1892 and recently restored, the hotel will re-open for business in April. For something that's more of a secret hideaway, seek out the contemporary design of Tomtom Suites, which is housed in a former Franciscan convent and has a breakfast terrace with superb views.
Istiklal Caddesi, a broad pedestrian street that runs for almost three kilometres, functions as the spine of this atmospheric neighbourhood. It is served by a vintage tram that bravely clanks through the shoppers and nocturnal revellers, while shooting off to the sides are little arcades buzzing with small restaurants. Explore further and you find antique shops, craftsmen's workshops, historic marbled hammams and washing-decorated alleys where the butcher, the baker and the furniture-maker still live side by side. At night the streets throng with young people, and from May to October a vibrant patchwork of bars and clubs colonises the rooftops. For a memorable overview, take the lift to the 19th floor of the Marmara Pera hotel for a drink or dinner at Mikla, a top-class restaurant serving sensual dishes such as pistachio-crusted lamb with a pomegranate molasses. Suddenly the whole of Istanbul is spread out before you in a glorious panorama of floodlit mosques, streaming traffic and illuminated bridges.
Beyoglu is also home to many contemporary art galleries and museums that make it clear why Istanbul deserves the title of cultural capital. One not to miss is the Pera Museum, which has five floors of galleries that create inspiring juxtapositions, so you might make a stimulating journey from the prints of Chagall to maritime paintings of the Ottoman navy to an engaging collection of elaborately-made weights and measures from Anatolia. Down beside the Bosphorus, Istanbul Modern is the city's flagship modern art gallery, and it's also worth checking what's on at Sakip Sabanci and Santralistanbul, which in April will unveil a major exhibition looking at the city's architectural history over the last century.
Taking to the water is another essential part of any visit to Istanbul. You could hop on one of the busy commuter ferries that lace the city together, take a day cruise up the Bosphorus, or spend some time exploring the wooded hills and waterfront villages of the Princes' Islands, where a new museum devoted to their history will open in July. For something romantic, board the sweet wooden launch that ferries guests across to Sumahan on the Water in Cengelkoy, on the Asian side. Set on a shoreline adorned with elegant yalis (waterside houses), grand fish restaurants and the magnificent Beylerbeyi Palace, where the Ottoman aristocracy would reside in summer, this deftly-designed 20-suite hotel and spa makes you feel like you are taking a sneaky short break inside your short break. You can lie in bed watching some of the 50,000 cargo ships that ply their way to and from the Black Sea every year, then dine at night on grilled fish beneath a star-speckled sky. Across the water the coloured lights outlining the mighty Bosphorus Bridge slowly change between yellow, green, red and blue, bearing a ceaseless traffic that is the chatter of continents.
By now you should be fully attuned to the Istanbul lifestyle, and it is time to plunge into the city's historic heart. With its clouds of tour groups, snail-like backpackers, honey-tongued carpet sellers and importuning restaurant touts, Sultanahmet is unavoidably touristy. If you don't want to sleep there, an impressive air-conditioned tram service makes it easy to make daily sightseeing raids. Yet there are also pockets of repose. One is the five-star Four Seasons hotel, which occupies a former prison, and another is the friendly and affordable Hotel Empress Zoe, which comes with a sun-trap roof terrace, garden and delicious breakfasts.
How much sightseeing you do here depends on your stamina and tastes. Tour the Topkapi Palace and the head swirls with tales of mad sultans, scheming eunuchs and the competing beauties of the harem. Visit the magnificent Sultanahmet Camii, also known as the Blue Mosque, and you are humbled by its audacious size. Further west, the 4,000 shops of the Grand Bazaar provoke a different wonder, while the smaller Egyptian Bazaar is piled high with spices and foodie treats. For a taste of bygone Istanbul, climb the stairs above its main entrance to lunch at Pandeli's, a venerable Greek restaurant with gorgeous blue tiles, old retainer waiters and a signature dish of sea bass cooked in parchment.
The one sight not to miss, though, and which encapsulates how this great city is so wonderfully encrusted with history, is the Hagia Sophia. Built in 537 by the Byzantine emperor Justinian, the Church of Holy Wisdom was unprecedented in its scale. Today it wears the scars of time like a boxer's face marks out his career. In the 9th century Vikings carved graffiti into its marble balconies and in 1204 Catholic crusaders ransacked its altar. Converted to an Islamic place of worship after the fall of Constantinople in 1453, it still has the mihram and mimbar from the days when it was used as a mosque up until 1932, when it became a museum. Even now, it is so huge that although it attracts thousands of visitors every day there remains ample space where you can find a quiet corner to contemplate this definitive symbol of the meeting of East and West. Fittingly, Istanbul's year as a European Capital of Culture has spurred on the restoration of its shimmering mosaics and hand-drawn decorations, along with the removal of scaffolding beneath its domes that had been in place for 16 years. Like the city itself, this great wonder of the world can now be seen in a new light.