I strongly disagree with the recommendation of the Reina Victoria. I stayed there two years ago and I didn't even stay the night. The room was dismal, very noisy and the whole place was obviously coasting on it's heritage. Additionally, Plaza Santa Ana was, at that time, filled with drunks and drug addicts. I would agree that the area is ground zero for the nightlife, which I enjoyed as well, but that can be a disadvantage as well. Just my opinion.
As far as "must-see's" Madrid is a great town to wander around but does not have what other great European City's have, IMHO. The Prado, obviously and there are others. As far as I'm concerned a day-trip to Toledo is a must, very beautiful and easy to reach, very memorable. -jp
[This message has been edited by JonNYC (edited 04-23-2001).]