For other people considering a trip to Budapest - by far the hotel with the most character is the grand Hotel Gellert...
It's a 4 star property, built in 1917 for the elite of the Austro-Hungarian empire. Has huge rooms, many overlooking the Danube, but the biggest attraction is that guests have free access to the thermal baths (which are fantastic).
Nightly rates are about DM150 per person per night, but you can get special weekend packages (DM440 per person for a three night stay).
A (huge) grand dining room, terrace cafe and the hot baths are all features.
Sorry to rave about this one, but I have stayed there three times in the last 6 months and can't get enough of the place (but DON'T expect internet ports etc in all the rooms !!)