Most people arrive in Uruguay from Argentina, and the itinerary below is designed accordingly. If you're traveling with family, my advice is to go straight to the beach.
Days 1-2: Arrive in Colonia
Popular with day-trippers, Colonia deserves your attention and is worth an overnight stay to truly enjoy its old-time, otherworldly pace of life. Stay at the colonial-style Hotel Plaza Mayor, and explore the Barrio Histórico on foot or by scooter.
Day 3: Montevideo
Stay in the upscale neighborhood of Carrasco at the intimate Belmont House. From here you can walk the coastal road, La Rambla, to the rundown but historical Old City, stopping off to enjoy the Port Market. Dine at the very grand Arcadia restaurant atop the Plaza Victoria.
Days 4-7: Punta del Este
Pass most of your time on Uruguay's famous beaches and rub shoulders with the glitterati. If sunbathing is not your thing, you'll find plenty of outdoor activities such as horseback riding and watersports.