I was there twice in the past year...

I stayed in the Rio Othon Palace which is a large 70's-style hotel on copacabana. If you get a high room with a view of the beach, you will sort of forget the old furniture and wood paneling.

Of course the Copacabana Palace is the nicest hotel, but it's also the most expensive. Recently, I think the most popular place has become Ceasar Park on Ipanema. It has both a good location, and nice rooms.

Restaurants:

Porcao is one of the better typical churrascarias, but it is a chain with other locations in other parts of the world (opening in New York soon...supposedly).

Mariu's is also good, and a bit more exotic.

You should get an "acai" at one of the juice stands. It is made from a fruit that is only found in the amazon basin.

Also try the great passion fruit (maracuja).

Activities:

HANG GLIDE (if you are into that sort of thing); it can be arranged at many of the hotels.

The Hippie Market is also interesting.

I would also reccommend the Confeteria Colombo (sp?) which is in the old downtown area. It's an old-fashioned Portuguese/Spanish pastry cafe that is ornately decorated.

Above all...enjoy!