A couple blocks from Powells is Gruner, a really good German restaurant. There are also various food cart pods for eating a little more on a budget.
For people watching, I'd recommend both Pioneer Courthouse Square and Portland Saturday Market [which, despite the name, also runs on Sundays]. Saturday Market has a great variety of food [i'd recommend peirogis from the Polish food cart] and lots of little knickknacks that you probably don't need but are still fun to browse.