I would highly recommend that you stay in union square. If you have the outfit for it, grammercy tavern or union square cafe are delightful for dinner.
The only W worth a DAMN in NYC is Union Square (and that is sad as it is, but I digress). Olives is wonderful for breakfast (@ the W).
Might I suggest you go to Splash on 17th between 5th and 6th?
It is not as flashy as Therapy but the attitude goes down about 20%.
You could take in Quad cinema (total dump cinema but they have gay movies and we have all been reduced to going to these art house places to see a man on man kiss)
Also, the area around is MUCH more vibrant. It really depends upon your personality. If you are bohemian enough, give the East Village a try. The attitude is virtually nill there and a good time should be had by all as long as you don't club baby seals for a living.