There are interesting neighborhoods to explore, a couple of important sights in Spanish History, lots of good Flamenco to be seen in the neighborhood of Sacromonte, and tea houses with roots in the Arab world. We'd absolutely recommend devoting 2 days to Granada.
Is 1 day enough in Granada?
However, I would recommend staying at least 1 night in Granada so you can experience this city at sunset and in the evening, and if you do have more time, I would suggest 2 days in Granada or at least 1.5 days if you can as it really is a wonderful and special city in Andalucia with so much to offer!