Kerrytown has a great college town atmosphere and is truly a pleasure to peruse on a lazy afternoon.
It is very gay-friendly, and has a variety of eccentric gift vendors, food vendors (during the farmers' market), and other related sorts of things.
Unfortunately, it's pricey even for a pricey town like Ann Arbor. Either be prepared to come away empty-handed, or spend a lot of money to come away with something to show for it.

Kerrytown market is a very nice weekend farmers market. they sell fresh fruits and vegetables. During the summer time, they are also open on wednesday noons. you can take the links for free by showing your university ID cards, otherwise, the link only charges you for about 25 or so. so it is really convenient to get to the market. there are nice little shops about the markets, and there are very good bakeries too!

Kerrytown is great for its atmosphere - especially on Farmer's Market days (Wed and Sat). The merchandise in the stores themselves is pretty pricey though, and mostly gift items, so it's not completely practical.