I visited Sri Lanka - Colombo and Kandy - for 2 nights, 3 days in Dec 2005. I travelled like a local man, not like a tourist, as I am from Kerala I wanted to experience the real life of Sri Lankans.
I landed in Colombo, left my luggage in the Left Luggage section just outside the airport and took a bus to Colombo bus stand. From there, I took another bus to Kandy. I had already made a friend in Kandy and could stay in his house for two nights.
The bus journey was nothing different from a normal journey in Kerala or Tamil Nadu. The autos are Bajaj! Yes, many Indian companies are selling their products in Sri Lanka. Bus was from China!
Kandys significance is by the Buddhist pilgrim centre of Tooth relics. It is believed that Buddhas tooth was recovered from his burial place in India and that was carried by monks to Sri Lanka. Buddhism is there in Sri Lanka for the last 2000 years or so.
I went to the temple which is under tight security after an attack on it by the Tamil fighters. Buddhist temples are ok, but wont feel that much spiritual / holy ambiance inside or by their rituals.
People are generally very friendly, but dont mention that you are from Tamil Nadu or dont use Tamil in your language, as the situation is not so good now.
I think, politics and corruption in the state is similar or worse than South Indian states.
I found that the UNESCOs World Heritage listed sites and ancient monuments are well connected for the tourists. The hotels and tour packages are mainly for budget / luxury travellers from the West, and hence for budget travellers from India will find it expensive.
Dont forget to buy printed cotton shirts / dresses, wooden mask (used for drama / dance) and other hand crafted items. Get them from Government run shops, if you wish to help the workers directly.