The center of La Paz is very walkable but the easiset way to get around is by taxi. However, make sure you agree on the fare before you board. The taxis aren't metered.
There is bus service to El Alto and the different zones of the city. You can take either a regular bus or micro, or a smaller, shared van, called a mini bus. Their routes are marked on the outside, and you can hail them just about anyplace in the city.
If you walk, be prepared for steep streets. You can always orient yourself by walking downhill tot he center of town.