Pure vanilla extract. Seriously, Mexican vanilla extract is very good.
Dental work and medical treatment is considerably much less than it is in the US side of the border about 60% less (http://www.mexicandoctors...).
Be very cautious when buying "real" Indian jewelry and rugs at the Curios stores. Fakes are plentiful. Buy only if you think you've negotiated a very cheap price, and don't mind taking a risk that it's most likely a fake.
Walk to Alvaro Obregon near Campillo to do your shopping for Mexican items.
Mexican Coca-Cola is a nice treat to pick up to bring back to the USA, as it's made with sugar cane rather than corn syrup than typical US Coca-Cola.
Haggling over prices is quite common for nearly all commerce; however, haggling is never done in a restaurant/bar or a supermarket where prices are fixed. In doing so, you will make yourself look very silly, and you'll be told quickly that the listed prices are not negotiable.
Nearly most merchants will speak some English but you'd be smart to learn a little Spanish so you don't get pegged as a stereotypical Gringo / Gringa, and prefer US Dollars paper currency, not coins over Mexican pesos, so it shouldn't be too hard to engage in commerce if you don't speak much Spanish. Also, be smart and carry enough cash for your purchases for the day, as credit cards are not as widely accepted as they are in the US.
Be aware, that you don't want to give a very large US denomination bill for a fairly cheap item like a $10 or $20 bill for a $5 item as a less scrupulous merchant may attempt to walk away with your money to "get change", and you'll have to chase the person down to get your money back.
before
Haggling is nearly expected for all purchases in the market, so don't be afraid to make an offer. Just make sure you've looked around and asked for prices before you blindly make a first bid: folks know when someone's looking to buy something as the word spreads quickly.