They say Monaco is the sort of place you either love or hate and my mind was made up years ago by a late-night visit to one of the principality's upmarket nightclubs. Maybe the serried ranks of open-top Bentleys, Aston Martins and Ferraris parked outside should have given a clue as to what lay ahead but you know how it is after a meal and a couple of glasses of wine: in for a penny, in for a pound and all that sort of thing.

Nice place as well, I remember, with its retractable roof allowing open-air dancing under the stars, and there was suitably unctuous service from the dinner-jacketed waiters. But the rub came when the drinks bill arrived and, for a reasonable-sized round, the sort of thing which might set you back £15 down the local, I was invited to produce a credit card and sign away the equivalent of a transatlantic air fare. This, I am told, is known as jet-set living and is also symptomatic of life in Monaco which, to Joe and Josephine Average, equates to one monster rip-off.

It always seems an Emperor's New Clothes kind of location. People say it is beautiful. Well, yes, but only if you find something appealing in a concrete jungle shoehorned on to an area of land that seems not much bigger than Hyde Park or if you revel in the concept of paying twice as much in a restaurant as you might reasonably expect anywhere else in France. As for the gloriously decadent shaken-not-stirred image of beautiful people gambling the night away in the casino, the truth always looks rather more like a load of old guys with yacht suntans who seem improbably attractive to a bevy of young lasses on the make, which is anything but glamorous.

Despite all of that, the Monaco grand prix, which coincides with Prince Rainier's 80th birthday next Sunday, remains for many very much the highlight of the formula one calendar. As Damon Hill, the last Briton to win the drivers' championship, says: "Monaco and formula one go hand in hand. Nowhere better shows off the lifestyle of the rich and famous. And, if you are fortunate enough to be there, nobody can deny there is a lot to look at."

Not that the race is everybody's idea of a sporting test. Nelson Piquet once memorably described the event, saying: "Driving around Monaco is like riding a bike round your living room." The point being that it is well nigh impossible for anybody to complete successfully any sort of overtaking manoeuvre and cars are outlandishly overpowered for the narrow roads and hairpin bends which are the trademark of formula one's only current street circuit.

Although no competing team would voice public criticism and risk alienating the sponsors who choose to do their most high-budget schmoozing around the event, you suspect some are less than enamoured with Monaco. Hill, who will view proceedings from a yacht in the harbour this year where he is hosting visitors who are part of his P1 Car Club, has mixed memories and says: "For a driver it is one of the most exciting and testing races. It is the one place, more than anywhere, where you have to race against the track rather than other drivers.

"You have to try and coax as much as you can out of your car without running into the barriers. My dad won it five times but I never did [although he had the race at his mercy in 1996 before mechanical problems forced him out] but I always loved the actual racing there. But in many ways it is a nightmare for the drivers and the support teams. Their pits really were the pits, although I am told things will be better this year. Mechanics just had to stand by the barriers or behind trees.

"A fire could have been catastrophic, because the pits were so crowded and you wondered how everybody would get away. And there was no escape from the crowds and the pressures of hospitality work when all you really wanted to do was think about your drive and the competition. Monaco, for a driver, is very hard work and very intense."

It is the history of the thing which appeals and the fans who flock to Monaco make this one of the most sought-after tickets in world sport. Ayrton Senna, who may have been the finest driver of them all, won six times here and his record tally will be equalled by Michael Schumacher should he continue Ferrari's recent resurgence with another win.

Sir Jackie Stewart, now a close friend of the Monaco royal family, had three wins, with the last, almost impossible to believe, 30 years ago. "In some ways it feels like yesterday," he says. "And for me the race will always be the jewel in the crown of formula one. It is unique, with the track nested among the exclusive hotels, shops and restaurants, with the cars racing past the casino which has centuries of history.

"Monaco allows the fans a proximity which no other track does. You are right next to the action, with the noise and speed, the smell and the colour. Driving there requires enormous accuracy. You are threading the proverbial needle. The railings, barriers and buildings are so close. Mistakes will be penalised and there is no run-off area."

Some might think it a surprise that Monaco's safety record is better than most, and that the track has not witnessed a fatality since the horrendous accident which claimed the life of Lorenzo Bandini in 1967, but Stewart argues it is no coincidence, with the Automobile Club of Monaco paying such close attention to safety issues.

"In any extreme sport there is always a downside risk," adds Stewart. "You look at rallying and see spectators who are not protected at all. The Monaco government has invested heavily and this year there is an extraordinary new paddock and pit complex which has been built in the harbour. The race is the most important thing for the principality, and will continue to be so, but they knew facilities had to be improved if it was going to continue."

It is a race where legendary figures such as Stewart are drawn back long after their racing days are over. He, like others, remembers his triumphs with astonishing clarity. And also his near miss as a team boss in 1997. "It was only about our fifth race with the Stewart-Ford team, and Rubens Barrichello finished second. My son Paul and I were in tears and we were invited up to the podium by Prince Rainier and he gave us a hug. It was one of the proudest moments of my life."

Even the most rabid petrolhead would probably agree that many races on the formula one calendar are much of a muchness, but Monaco is different. A glorious sporting anachronism it may be but it remains hypnotically fascinating. And it is somewhere where the best have triumphed more often than not through the years - which is why Schumacher will most likely stand alongside Senna in the pantheon of Monaco greats by Sunday night.