Navajo weavings
The characteristic folk art of the Navajo is the Navajo rug or blanket. Each region of the reservation has its own characteristic style of weavings, with a few patterns that can be found reservation-wide. As with other folk art, quality and prices vary wildly; small items for the tourist trade can be had for as little as $20 or so, while a gigantic, museum-quality but brand-new rather than antique rug from the prestigious "Two Grey Hills" region sold for $60,000 at a Santa Fe Indian Market a few years ago. The key thing to remember is that the value of a particular weaving is the value you place on it. If you see a piece you like, haggle over price if you wish; if you don't get the price you want, look for another one.
Beware of non-authentic imports from Mexico and overseas carried by unscrupulous "dealers" that have tried to capitalize on the market for Navajo work. Many of the "tourist traps" of the region, particularly those just off the reservation, are plagued with these, but most sources on the reservation itself are entirely aboveboard. Some reliable sources of rugs:
Two Grey Hills
There are several other trading posts on the reservation that still are "working" posts, in the sense that they function not just as distribution points for goods bound into the reservation, but also places where weavers and other artisans can trade their rugs for goods or put them up for sale on a commission basis. Selections tend to be small, but the quality is usually very good the trading-post operators don't bother with junk and prices are better than in the galleries of off-reservation art centers like Santa Fe. Many of the reputable posts are off the beaten path -- sometimes far off it. Three worth visiting are at Two Grey Hills and Crystal in New Mexico, and the extremely remote Shonto in Arizona.
Teec Nos Pos
For the less adventurous, most of the towns on the reservation have galleries with good reputations for authenticity, although you'll pay more for a given rug there than at the posts. Selections tend to be broader than at the posts. Reputable galleries are in Ganado, Kayenta, Monument Valley and Teec Nos Pos in Arizona, and Bluff in Utah, among others.
Possibly the most entertaining way of getting a rug, and one that can offer excellent value for dollar along with a fascinating cultural experience, is at a rug auction. If you're in the area on the second or third Friday of every month, Crownpoint, a tiny town between Farmington and Grants, hosts the Crownpoint Rug Auction (http://www.crownpointruga...). The Crownpoint Rug Auction gives buyers the unique opportunity to purchase Navajo rugs directly from the weavers themselves, at prices well below retail. Before the actual auction, you can hold rugs in your hands and appreciate them up close. Some sell for $50 or less, and some sell for thousands of dollars. Value for dollar is particularly good during the spring. Weavers come from all over Navajo Nation to sell rugs at Crownpoint. Even if you don't buy anything, you are in for a treat. No two rugs are alike!
Hubbell Trading Post National Historic Site
(http://www.nps.gov/hutr/), in arizona, is a unit of the united states national park service that preserves a historic trading post on the reservation, and is a good starting point for looking at rugs. there is often a weaver on the premises who will be actively working on a rug and should not be disturbed while at it -- she's likely to speak only navajo along with interpretive exhibits. the post also has a reasonable selection of rugs for sale at competitive prices. they're in a back room that may not be obvious amid the usual tourist paraphernalia; ask.
pottery and jewelry
Most reservation centers that sell weavings also sell pottery and jewelry made in Navajo Nation. Navajo silver work, including concho belts, tends to be of a very high quality. The pottery is quite different from that of the Pueblo Indians to the east, but good Navajo pottery is still an art form and well worth collecting. Two warnings are necessary, however. First, you don't have to get very far out of Navajo Nation to encounter bogus "trading posts" in which the goods are not Navajo at all, but rather cheap imports. This is particularly a problem with jewelry. Second, removal of "prehistoric" pottery from Navajo Nation is strongly discouraged and likely illegal; it is certainly illegal to obtain such work from excavations of archaeological sites, whether acknowledged or not. Settle for the modern stuff; it still qualifies as entirely authentic Navajo arts and crafts.