for quite a while they've been refurbishing the prater theatre, next door to the prater beer garden and restaurant. the stage is being used by the ensemble of berlin's volksbühne, one of the most progressive in town. their productions tend to be experimental, pretty much in-your-face theatre. to my knowledge, they don't do english surtitles (as some of the other berlin theatres do on certain days), so you'll need a bit of german. that being said, you could of course simply skip the theatre business altogether and just sit in their funky lobby-cum-café, or - if the sun's out - out on the pavement on one of the café's cool benches, sip your latte and watch the crowd on kastanienallee.
check out their website here (only partly in english).
find it on kastanienallee 7-9, 10435 berlin (prenzlauer berg), phone (box office) 030-44 35 18 27, box office open daily 12.00-18.00 h, shows start at different times, check their website here
+++ UPDATE: THE PRATER CAFE IS CURRENTLY CLOSED FOR REFURBISHMENT. WILL LET YOU KNOW WHEN IT'S OPEN AGAIN (state of play, spring 2010) +++
