Dresden is great, make sure to have enough time. I always stayed at the Taschenbergpalais.
I'm quite common to the region, my favorites around are Meissen, Sächsische Schweiz, Moritzburg and Görlitz. Sebnitz if you are interested in silk flowers or even Erzgebirge (Annaberg-Buchholz, Seiffen).
Meissen is an easy daytrip, same Moritzburg. Frankly can't really recommend a hotel in the other regions. They are not the most wealthiest in Germany....
Could Leipzig be an option?