Solid 5 star hotels (perhaps not quite Luxury) and possibly within budget are the Sofitel St James (very good location) and The Landmark (A former Regent hotel) with good sized rooms and next to Marylebone Tube.

Knightsbridge area for me is a bit overated. Good (but expensive) shops by day but not much fun in the evening. The area seems quite Middle Eastern in the evening.

One thought is that if there is no real luxury hotels in London why pay a fortune not getting it? I find the City Inn at Westminster an excellent contemporary 4 star - it's so good a lot of MPs have used their expenses to stay there!