Wicker Toboggan Sled Ride
The coolest thing ever! Definitely the most fun you will have in Funchal! You go up hill by cable car and up there, they offer you to go down (not the whole way though - about half-way) on a sled through the streets. It's a wooden sled with NO WHEELS! Two "drivers" will basically push you in the sled downhill, and when it has caught enough speed, they will hop on behind you. You can put 2 or 3 people sitting comfortably. A little pricey (I believe 15-10 euros per person), but definitely worth it. It goes very very fast, walking down it would take you approximately 40 minutes, and the whole thing lasts about 3. Very exhilarating!
When you are done, they will offer you a picture for 10 euros, but you don't have to take it. Neither the taxis to take you the rest of the way down - right by the end of the sled they are quite pricey and right there is a bus stop with buses for 1 euro which take you down to downtown.