The Last Resort 3/Bundoran:It's slot-machine heaven, gilded with laughing leprechauns, but it's also a surfer's dream, with an idyllic cove. Rosita Bolandon the many faces of Bundoran

Driving into Bundoran, my attention is divided three ways. First, by the wild, silvery-blue Atlantic to my left. Second, by the ugly developments in the town that make it bristle with cranes. Thirdly, by the grey sky that's hanging sullenly over it all, waiting to pounce.

Many times over the years, I've gone through Bundoran on the way to elsewhere, rarely spending long there. No offence to the people of Bundoran, but there are many other places by the sea in Ireland I like far better. Anyway, I park in the most scenic car park I've seen in ages, fronting right on to the sea in the middle of the town, and wonder briefly how much the land is worth, and how long it'll remain a humble car park. It's difficult not to think like that these days when you're anywhere near a view in Ireland. By the cut of the new developments in the town, it's clear I'm not the first person to look at a piece of land in Bundoran and see euro signs hopping out of it.

The wind is blowing and the rain is beginning to spit - perfect Irish seaside weather for an optimistic ice cream. I have a little mooch around the Irish Gift Shop on Main Street, enjoying all the gloriously kitsch shamrock-ornamented objects, and the industrious little leprechauns, depicted busily swinging golfclubs, knocking back pints of Guinness, and inspecting their crocks of gold. There are also some very old postcards on sale, including one of the famous Astoria Ballroom, now closed, which had its heyday as a showband venue in the 1960s and 1970s.

This is Michael and Phyllis Cullen's shop and, when I take the card up to the till to pay, Michael says he remembers dancing in the Astoria. Bundoran has long been known as a place particularly favoured by cross-Border tourists, who, in the volatile days of the Troubles, were keen to escape the marching season. Do they still get many Northerners? The words are hardly out of my mouth before I realise my semantic mistake.

"You mean six county people," Phyllis corrects me. "We're Northerners ourselves."

Bundoran town centre is often described as tacky, and it's fair to say that Main Street lives right down to that reputation. There's a bar at one end called The Kicking Donkey, with a life-sized donkey attached to its facade, and, at the other end, a bar called The Chasin' Bull. In between, there's a twee little blue and yellow train that does a circuit of the town, a string of noisy in-your-face amusement arcades, several big brutes of hotels and apartment blocks, and enough fast-food outlets to make a cardiologist break into a cold sweat.

Ciaran and Sandra Deehan from Derry, who have a caravan here and come every year, are looking at a poster advertising boat trips. Fishing is the big attraction for Ciaran in Bundoran.

"We visit the arcades the odd time," he says. "But they're really only for the very young kids and the older, retired crowd. For everyone in between, this town is all about drinking."

BUNDORAN NOW HAS four surf schools, and various shops selling surfing gear. In the last decade, the town's international and domestic reputation as a surfing destination has grown. If the people who kept the town going during the hard years of the Troubles were cross-Border tourists on small budgets, for whom the many amusement arcades and funfairs were created, the new generation of visitors are coming to ride the famous waves.

Walking up Main Street in their board shorts are Canadians Kate Orford, and sisters Julia and Clare Hanbury. They have all come here specifically to surf. "Bundoran is quite cute, and the people are lovely. The people are the best part," Orford says.

"The arcades are not very nice, though," Clare admits. "They are a bit tacky and loud."

Niamh Hamill manages Bundoran's much-praised Donegal Adventure Centre, which, among other activities, offers surfing lessons to both children and adults, and is the oldest surf school in town. A Dubliner, she doesn't shy away from admitting Bundoran is still working on re-addressing its image and reputation as a destination within the domestic tourist market.

"It was very difficult to rebrand the town when the customers were low-spend," she says. "We can't sell Ireland for the weather, and we can't sell it for cheap, so we need to look at other ways of promoting a place, and here, it's surfing. We have excellent surfing, with three beaches, each suitable for people at different levels of ability, depending on conditions. The whole surf culture here is quite contemporary. Bundoran used to be known as a downmarket slot-machine, pub destination and [ the tourism bodies] wanted to bring it up. With the peace process, Donegal became a lot more attractive to the domestic market, and the north-west has really opened up to tourists since. We don't get the rough element we used to get."

So where have all the "rough element" gone now? Hamill shrugs. "Probably to Ibiza?" she offers.

"It could bloody snow here in the summer and you'd still get loyal Northerners coming," declares Richard Fitzgerald, who runs a shop selling surfing gear on Main Street, which has been open for 17 years. "But there is beginning to be a crossover between the two kinds of tourists, the arcades-and-candyfloss-crowd, and the surfers."

Fitzgerald identifies 2000 as the year when Bundoran really took off as a surfing destination. "We were already getting people from Hawaii, South Africa, Australia - the whole shooting match. It was only about then that Irish people starting catching on. It suddenly became a cool sport. Bundoran is like Indonesia with wetsuits. A cold-water Eden."

I SPEND A bit of time wandering in and out of the amusement arcades, which are hard to ignore, since there are so many of them.

When is an over-18 only area not an over-18 only area? It seems to be when parents play slot machines and poker with babies in buggies beside them, or perched on their laps, and when older children run in and out at random to badger parents for more money for ice creams, chips, and the cuddly-toy machines at the front of all these arcades. Call me old-fashioned (and privileged), but I'm glad my earliest childhood memories of my own seaside holidays in Caherdaniel were of wet sandy beaches, lobster pots, the glistening scales of the fish my brothers caught, crabs in buckets, cold swims, and the unending mysteries of rock pools, rather than the wall-to-wall claustrophobic clatter of slot machines and neon-coloured over-stuffed toys that's going on here.

When you turn your back on the town and put your face to the west, the sea fills the horizon and its sound fills your head with its satisfying, ever-comforting rhythms. Bundoran has beautiful beaches. James Connolly, the photographer, shows me one of its lovely secret places: a rocky cove with a diving board and a ladder leading down to the clearest of water. My swimming things are in the car, and I'm hoping to come back here later and jump into that cold, clear water and swim, even if I do end up feeling as if I've been turned inside out.

But when I go back to the car, and drive to Tullan beach to watch the surfers, the horizon disappears from sight. The grey sky finally collapses and the rain comes down relentlessly. For a while, I sit and wait it out. Then even the surfers start coming out of the water, so I reluctantly abandon my hopes of a swim in Bundoran that day. But I now know where that alluring little rocky cove is, and the next summer's day I'm driving through Bundoran, I'll stop and swim there.