The Mexican Peso Coins
Since 1993, Mexico uses the New Mexican Peso. The Mexican Peso comes in demonimations of 1, 2, 5, 10 and the rare 20 Pesos. Centavos (cents) are 5, 10, 20 and 50.
The easy way to price things is to remove a zero and you are pretty close to the Canadian exchange rate, and even lower for the American dollar as of this writing.
TIP FOR CANADIANS: Don't bring US travellers checks. There are so many ATM machines that will allow you to withdraw pesos at a better rate than most "Casa de Cambios". Remember to check with your bank if you what they will charge you for ATM fees outside your country of origin, and let them know you will be travelling so they will not block your card. You do not need to bring American money either. Apart from paying tips at an all-inclusive, you are best to buy pesos before leaving, or once here.
The Mexican Bills
Mexican bills com in denominations of 20, 50, 100, 200, 500 and the very rare 1000 bills.
Cash is the preferred method of payment, but most descent restaurants, art galleries, shops will take most major credit cards. You may be asked to pay an extra 2-3% if paying with a credit card as most prices are cash discounted.
If you do need to exchange money, the best rate is from the banks, but be prepared to wait in line. Second best is the Casa de Cambio (Money Exchange) places around town. Lastly, if you are staying at a hotel, they usually offer money exchange services, but usually give the worst rate.
Scotia Bank customers will be happy to know that you could widthdraw Pesos from a Scotiabank ATM (over 600 branches in Mexico) at no charge! Find out more here.