Hyatt is centrally located in business area at around 3 o'clock of the lake, it's a newer property with great pool/health club. Lot's of restaurants around for normal people.

Shangri-la is more secluded in a scenic part of the lake at around 11-12 o'clock. The property is much older so the facilities are not as nice.

For a longer stay I prefer the Shangri-la. But for one night it really doesn't make much difference. The two hotels are about 1 km apart, and since the sights are quite dispersed you will need to take taxis from either one.

BTW, there's also a state guest house at around 8 o'clock, which probably has the best view, it was Mao's residence when he was in Hangzhou. He was there a lot.