I'm more of a main-stream traveler when on holiday. Yes the B&B and 'nice little places near the gay area' are fun .. sometimes. Sometimes they change from great to seedy very quickly.

For an 'over the top' option try the Cape Grace hotel. It is on the list of top hotels in the world. (Table Bay hotel also is and where Michaeal Jackson stayed but it is way snobish).

The whole area of the 'waterfront' is great (str8t). You can walk to the huge huge Victoria and Albert Waterfront 'mall' with shops and restaurants and loads to do. Be sure to visit the 'blue' or 'red' markets which are there and are the locally made (and priced high) crafts .. really great.

The hotel http://www.capegrace.com/home/default.asp has a great restaurant .. and also offers (for a fee) a Scotch Tasting which really was more like a Scotch LEARNING evening. They have rooms called 'loft' rooms which are outstanding ($$$) but have balcony overlooking the pier and harbour.... Definately would go back!