You should be able to find lots of previous posts about the Lisbon Sheraton here. It's OK, but a long way from the Le Meridien. I've stayed at both hotels, and unless I needed to be near the Sheraton, I'd stay at the Le Meridien since you can walk to many central attractions.
But if it's your money and $200 difference, then I guess I'd try the Sheraton and take cabs to centro. You can walk to the Castello where you can spend an afternoon. Try Cais De Ribiera for excellent seafood. Carefull if you walk there since you have to go past a slightly crummy area. Barra Alta has plenty of good restaurants some of which are very authentic. Good clubs too.
Taxi's are pretty cheap as I recall.
[This message has been edited by stimpy (edited 05-12-2001).]