Peyia is located about 7km from central Paphos, along the coast road towards Coral Bay.
The village used to be tiny and the old part, like most villages engulfed by development in Paphos, is small and quaint. The rest of Peyia however is a mass of villas and apartments and around 80% of the population are now British.
For that reason, there are many bars and restaurants in Peyia itself, most located in the village centre, close to the popular Phillipos supermarket.
The Peyia tavern is one of them and is a popular haunt with friends who live in Peyia. I've never actually been there but will try to do so after this recommendation.