I've commented on all these subjects in the past week on the Starwood forum and the China board.
Personally, the idea of wanting to be close to the "silk market" strikes me as a little funny. I think I'd want to be as far away from it as possible. And I'm only half kidding. What a wretched place to try to buy anything. Truly the most unpleasant shopping experience I can recall (well, at least outside of Indonesia). And I'm cool with the blood sport bargaining (prices can start as much as 95% overpriced). It's the vibe of the place -- you simply can't stop and look at the stuff without being hassled. Heck, you can't even walk down the aisles without being hassled. Some vendors will actually try to grab you to get your attention. Who the heck needs that? Certainly not to buy the stuff that's for sale. Admittedly, some of it is decent, but it's mostly junk. Given a choice, I would happily pay a bit more to buy it elsewhere!
FWIW, the Pearl Market is much the same. SLIGHTLY more tolerable (the toy market behind it is much better, but it doesn't sound like you need that). But would I return their to shop? Probably not.
The best market I found in Beijing was the weekend morning Panjiayuan market. Crowded, but with a cool vibe (plenty of locals) and plenty to buy. Not much clothing there, however. I didn't otherwise do a lot of shopping in Beijing, but I did hit the hutong streets of Dazhalan just southwest of Mao's tomb. You can buy clothing there, and enough foreign tourists hit the area that some of the styles are plausible to the Western eye.
As to the Starwood issue, I stayed on the Executive Floor of the Great Wall Sheraton, and I couldn't have been happier. I upgraded for 1500 points (on a cash & points stay no less), and got free drinks/munchies and breakfast. Room and facilities were great (exterior of hotel is hideous). Location right next to 3rd ring is great for dealing with Beijing's traffic -- even the pearl and silk markets are easy to reach if you want to. For the same money, would I try the St. Regis? Sure. Would I pay materially more? No.