We had a wonderful stay at the Grand Hotel Union and in LJU. As I recall, TripAdvisor had some good insights into whether the newer or older wing was better. I believe we were in the old wing because if it's "charm", but I can't recall. The hotel was still all aglow about Bill Clinton having stayed there. It is perfectly located for getting around town on foot.
I don't recall any specific restaurants from our visit in 2004 and things can change a lot in a very short span of time. At that point, they were starting the Slo food movement and we got some excellent recommendations just by asking the friendly people wandering around. Local wines are worth trying.
We were there longer than you have planned and rented a car for trips out in the country. It's fun just driving around the back roads and stopping at little towns for lunch. LJU is one of the most charming towns we've ever visited, and we've been to lots of places. Even its airport is a pleasure. Enjoy.