Having lived in Munich the last 5 years and played guitar for the last 15 I have always been eager to find the best stores, so here goes:
Live Lights Music (Augustenstr. 15,
www.llm.de), speak to Claudio for guitars, great guy, very helpful. They also do price matching, so go there with your cheapest internet price and they will match it.
Lindberg (Sonnenstr.) not so knowledgeable IMO, a salesperson once told me I wouldn't hear much difference between a fixed, strings thru body bridge and a floyd rose system, but friendly and they also do pricematching.
Musikshop (OEZ), everytime I have been there they have been unfriendly SOBs, overly eager to shove products down your throat that and get pissy if you don't buy what you try.
Folkladen (used to be at Rosenheimer Platz, is now in Einsteinstr), VERY friendly, great deals on strings, very good acoustic guitars and good for beginners stuff.
East Side Musik, (Pariser Str near Ostbahnhof), 2nd hand store, tries to overcharge, but easy to haggle with, massive selection of acoustics, some real bargains can be found there
Manhattan, (Rosenheimer Str, near Rosenheimer Platz), 2nd hand, good selection of electrics, friendly, they do repairs too.
Munich Repair Shop, (Breisacher Str. 4 near Ostbahnhof), repair shop (who'da guessed

) and also home of Steve's custom guitars, great people, very knowledable about repairs. I have my guitars refretted here. good stuff !
A great place is www.thomann.de, they have everything and deliver very quickly and cheaply. I order most of my stuff from there.