If you want to stay in the Colonial Zone check out Hotel Conde de Penabla. This is old colonial hotel in the heart of the zone located across the square from the oldest church in the new world. It is a great place to stay. Reasonably priced, friendly staff with a large indoor and outdoor cafe. Ask for a room with a balcony. The rooms are nothing exciting but clean and comfortable and the a/c works well.
LTSteve