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2 nights in Madrid advice on a 'great' hotel i.e. location location...

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We leave in 7 weeks (yay) and after some 'detours' and 2 and a half weeks driving around Spain, we will have two nights in Madrid before flying home.

I'm looking for somewhere really nice, say 4* (?) central to the very heart of Madrid for wandering, eating, people watching and just relaxing before the long flight home. I know everyone always says "what price range?" but we're open to any suggestions whether it be a chain hotel, quaint hotel (preferred) or some sort of B&B just as long as we can walk out the door and be in the 'thick of it'.

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