Well, for muffins, scones, bread, and a daily vegetarian pizza selection, we love Arizmendi on Lakeshore. They have plenty of tables for relaxing, and Peet's Coffee is right across the street.
But for desserts, I don't think you can beat Bakesale Betty, at the corner of Telegraph and 51st. Her brownies, banana bread, cookies -- everything -- is fantastic. She even sells milk or coffee to go with whatever you purchase. (I hear she's a former Chez Panisse pastry chef.)