The Caravelle: My favorite. Get a room overlooking Dong Khoi (sp?). You can spend hours staring out the window at the motorbikes. Hit the rooftop Saigon Saigon bar for good views and an entertaining cover band or two during the evening hours.

Park Hyatt Saigon: Now up and running, I believe. My my ... how things change.

The Sheraton is behind The Caravelle and a good choice as well.

Things to do:

Cu Chi Tunnels
Mekong Delta
Ben Thanh Market / Cholon
War Rememberance/Remnants Museum (or whatever they're calling it now).
Reunification Palace

If you're into late night shenanigans, the backpacker district has some entertaining bars: Allez Boo, Lost in Saigon, amongst others. They're all within stumbling distance of one another. If you're into something a little more upscale, Q Bar opposite the Caravelle can be good.