There is very little in terms of local craft production on the island -- almost everything is imported from the mainland -- so save the big purchases for Bangkok or Chiang Mai. New shopping areas are growing in number by the day, however, around Chaweng. Pearls are cultivated locally, and you'll see some good examples in several shops. Ask local tour operators about trips to Naga Pearl Farm, on Ko Matsum.
Note: This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.