This picturesque city on the lakes that connect to Puerto Varas, Chile, is worth mentioning as well. The town is charming, with a central square overlooking a sparkling blue Lake Nahuel Huapi. Saint Bernards are common, and the smell of chocolate drifts through the air. Architecture reminiscent of Switzerland is the standard, and shops feature beautiful ceramics, sweaters, hand-woven rugs and other specialties.
Outside of town, to the south and west, you can take horseback rides and even camping trips on horseback through forests and canyon lands with strange rock formations. The crossing of the lakes into Chile by boat and bus is spectacular, and you can go halfway, spend the night in a nice hotel, and return without going further into Chile.
The forests north of town are beautiful, and inspired Walt Disney to design the forests in his children's movie, Bambi. We are not generally "city people" but are very comfortable with this recommendation. It is one of our favorite places in South America.