Great buys are the usual Egyptian suspects: water pipes, rugs, oriental lamps, shirts in different lengths with embroidery, backgammon games, silver jewelery, etc. Prices are geared for tourists, so haggling is a must, pay max. 50%-60% of the first price offered, anything else is a rip-off. If you are not sure about the price, go to the next shop, they all offer more or less the same things, and start bargaining again there.
Look out for Bedouin Handicrafts, some beautiful pieces are avalible. Hand embroidered and made in Dahab, St Catherines and El Arish by Bedouin women. Sheikh Salem House has a good selection of items as does some of the other Bedouin establishments in Dahab.
If your stay extends with or without intention your shopping behaviour will focus on the Ghazala Market where you can find anything you need to uptate your on-the-road-equipment from functional to convenient. For local fare & much cheaper fruit & veg, go to Assalah shopping area 5 min taxi, or walk to Eel Garden then head into town.
It is almost impossible to get rolling tobacco in Dahab, be prepared if you are not keen on factory made ones.