I recommend Ronda. It's a little town in the south (Andalucia), and is quite beautifully preserved. The older city was built on a cliff, and they inhabitants had to invent some pretty interesting and elaborate ways to bring water into the city.
It is also famous for the largest arena in Spain if you're into that sort of thing (though just visiting the site was enough for me). If you have the means, the Parador is located in what was once the city hall, and the view from the breakfast hall is really breath taking. Like all paradores the service is beyond excellent and the rooms are great.
