Thanks everyone for your help. The trip has turned into an adventure of 3 people - so this will be exciting. We've decided on Madrid, got the tickets on AF for a great rate and have booked at the Hotel Plaza Mayor. It's a very small budget hotel very reasonably priced and from the looks of the website - very quaint with lots of character.
Can't wait for Tapas, architecture, great food and company of friends! I'm excited!!
AZJ