Food in Hungary is amazing!
There are many good restaurants in Budapest and even the expensive ones are reasonably priced. The Budapest Week, local Eng lang paper, has a restuarant guide online with links to a variety of restaurants. www.budapestweek.com/restaurants

Some of my favorites are:
Fatal - Vaci utca 67 (maybe a bit toursity but everyone I have brought here has loved it)

Articsoka - Zich Jeno u. 17 www.articsoka.hu

Voros Ordog (Red Devil) - Castle hill area

Bogolyvar - Allatkerti 2 www.bagolyvar.com

For a sweet snack - Gerbeaud CAfe on Vorosmarty ter at end of Vaci utca www.gerbeaud.hu

And for a great chance to sample wine from all over the country Magyar Borok Haza on Szentharomsag Ter - across from Matyas Templom

Friends recommended Alabardos to me but I was dissapointed, I think you can find much better for less at many other places.