Ferragudo is very pretty, and quiet if that's what you are after, and if you want something livelier you can get a water taxi across to Portimao.
Would recommend a trip out on the "pirate" ship, touristy but great fun!
The main square in the village has entertainment on some evenings,and all the locals go with their families.
Also there's a great little travel agency in the village for arranging trips out and about, or at least there was when we went 4 years ago.