We did the island, all round. This is the best spot for easy access to the city of Funchal and its amenities, access to and from the airport without nuisance, access to all major roads and routes, and a pleasant environment for the evenings. You can visit anywhere on the island within an hour by car, and there is lots to see.
Canico, pronounced caniso, is about 9k from the airport, about ten minutes on the new super-highway. It has many high quality hotels around, for dinners and drinks, with music and facilities.
This apartment block, for that is what it really is, is charming and pleasant, but has recently seen better days: it is a little bit worn, but both scrupulously clean and comfortable all the same. It is situated right opposite the Royal Orchid Hotel, the only means of finding it, save the girl in the local tourist office: she is asked by everyone who has ever booked here.
The local bus takes you right into Funchal, for 1.60 Euros, and it is regular and prompt. It is also quite a ride, if you sit on the drivers side. The markets. the marina, the cafes and bars of Funchal are all excellent.
The other spots on the island are all easily accessed fron Canico.
Do not listen to anyone who says you are too near the airport, as you never hear the planes: they all bank and have short take off and landing.
This is an excellent spot on a beautiful island with the world's second most friendly and courteous people.