Hotel Midori 

The location is fantastic: two blocks from the Plaza de Armas, and one block from the quirky but very good Museo Inka. The street couldn't be quieter--one side is the back of a school, so just sounds of children during the day. The other side has only three businesses: this hotel, the excellent Organika restaurant, and a little cafe we never went to but which looked pretty cool. We had a twin bed room, both beds very comfortable, with side tables and plugs. There was a big wardrobe for hanging clothes and storing stuff, a portable heater, and plenty of hot water and water pressure in the shower. The place has a nice, woody, old-fashioned feel, with a sunny central courtyard and a lounge/library upstairs. Standard Peruvian breakfast (eggs, fresh fruit, bread, yogurt, coffee, etc.) but there's hot water all day for your tea, coca or otherwise. The staff is wonderfully friendly and helpful--we stashed our stuff there after we checked out on our last day in Peru and they invited us to chill in the courtyard if we liked.