The flight to Luang Prabang takes only about 40 minutes. From the airport to town is about 20 minutes, bargain for a soongthaew outside the airport. Usually they will load different passengers with different destinations in town altogether.
Luang Prabang is located on the confluence of the Mekong and the Khan river. It is alltogether rather small, and certainly has about enough tourists around now. Hopefully it will not be developed much further.
In Luang Prabang I have always stayed at Phusi Hotel. This is relatively upmarket at 35-40 US $ a night. It has a nice garden, very good to relax in the evening. However, it is located a 10 minute walk from Luang Prabang main street. Main street or Thanon Phothisalat has a few bakeries and restaurants. Also nowadays quite a few cybercafes, so no difficulties here to keep in contact with your friends and relatives. While not a big area, it seems to be the place where a lot of people just hang out at all times of day.
Very closeby are the Royal Palace grounds. Nowadays the can be visited everyday. In the afternoon there is some traditional dancing in one of its buildings. The palace is certainly worth a visit. Inside it has the same kind of 'childish' figures on the walls, as you seen on the pictures from Wat Xieng Thong. Unfortunately no photographs can be taken inside. Close to the street is a new building, almost finished now, that is supposed to house the famous Prabang, a small Buddha figure, associated with Luang Prabang. The Prabang, possibly the real one, I am not sure about it, can be seen through a window at the Royal Palace.
There are many interesting temples to visit. It is not only their architecture or artistic value, but also the general atmosphere of Luang Prabang that makes this a pleasant experience. The most visited and interesting wat is most likely Wat Xieng Thong. It has beautiful mosaic decorations and gilded decorated walls and doors on its different temples.
Other temples that are certainly worth a visit are Wat Mai (gilded stucco's), Wat Aham (interesting paintings inside), and Wat Wisunalat. The central hill in Luang Prabang will five you a superb view over the Royal Palace and the rivers. On top you will find Wat Chom Si. It is a good walk upstairs to enjoy the sunset over the Mekong from up there. However if you stay somewhat longer, you will have ample time to visit many more places.
An interesting trip can be made to the Pak Ou Caves. They are caves located on the banks of the Mekong. The usual way to go is by soongthaew to a local village opposite the caves, and then take a boat to cross the river. The soongthaew trip one way takes about 50 minutes. Prices vary from 7-12 US $. On the way the driver will often stop at a local village, maybe you can ask him to do so. The caves are quite pictoresque and house thousands of small and bigger Buddha images. Do not forget, there are two caves, one close to the water and easily visible. For the upper one, you will have to climb some stairs, and rent a flashlight to see what's inside.
There are some waterfalls around Luang Prabang that are well worth a visit, particularly Kuang Si Falls. Another waterfall is Taat Sae Falls, but do not go there during the dry season, you will be disappointed.
Ban Phanom is reachable by bicycle outside town(4 km), but the road is not that easy. It houses an activeweaving industry. There is a local market catering to tourists, to sell colorful hand-woven cloth. If you go further down the road from Ban Phanom, you may be able to find the grave of Henri Mouhot, who'discovered' Angkor Wat. This would be a good exercise by bicycle. The grave itself is quite unremarkable. However, a healthy natural environment all the way to get there.