Our family travelled in 2009 to Istanbul and simply fell if love with the place. I love the old and new mixing together and you really get that sense when you cross the Bosphoros. The older part of town - Sultanamet is awe-inspiring - it's a history lesson just standing in that part of time. So take your time, let history soak in and understand that this place has been the center of much human history for many thousands of years. Hagia Sofia was a breath-taking experience.
Within the European side, you have night clubs, restaurants, etc that are similar to any Central European or Western European city. Prices were very reasonable as long as you avoid the tourist traps - such as the row of stalls near Hagia Sofia or the Blue Mosque. It's great to browse through, but just control your urge to start buying stuff - you're paying more because of the location - not quality. Having said that we met a wonderful American that moved there and opened a café and sold us some great porcelain tiles... so just keep your eyes and ears open and make sure you don't get carried away.
In terms of safety - we travelled to over 40 cities during our 6 months and had little to no problems. Indeed the only place we had some bad luck was in Paris and Barcelona. The opposite happened in Istanbul where we left a wallet full of cash and ID cards, etc. in a restaurant. After we walked away - unaware of our loss - we heard some shouting trying get our attention - it was the waiter running after us to return the wallet - everything completely intact. So, be careful but don't be mistrusting.
Turkey is a Muslim country and while we have our stereotypes of what that might mean, Turkey might be another story all together. They seem to be very relaxed about it. We're not Muslim but yet we had access to the Blue Mosque and went right in. Just cover your head in religious places and be respectful of the norms and dress code. For example, my wife and I were able to catch some live heavy metal rock (we didn't know until we stepped in) at a café on the main promenade. There were college kids (girls and boys) smoking and drinking just like you would see here in a local bar (before they banned smoking in LA ;-)
Again, be safe and careful but you should have a great time. Safe travels.
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