I'll throw my hat in the ring for the Intercontinental too. With the opening of the tunnel it's perfectly located, and the rooms facing the bay offer a great view. The rooftop bar is really nice for sundowners.

For restaurants, an absolute institution is Trishna for fantastic seafood. Depending how mobile you are it's a nice walk in the evenings from the Intercontinental too.

If you do stay down in old Mumbai, be sure to factor in a painfully long drive to the airport depending on time of day!