It's not a luxury hotel, but check out the Hotel General. We had a marvelous stay there in a two-room suite. Great breakfasts, and the staff is terrific. Industrial area, but that has its advantages in that the catacorner Staropramen brewery has a terrific restaurant. And the streetcar stops nearby.

Love, love Prague. Make sure you visit the Klášterní pivovar Strahov (Strahov monastery brewpub) in the Mala Strana. Best beer I've ever had.