I've stayed at the Relais Bosquet and liked it and the area, although I think it's gotten a bit expensive for what it is. I don't think I'd stay in the 12th.

How long will you be in Paris? Have you considered an apartment?

The 12th is obviously far better and more local -- and of course you will save much more money for everything, not just the hotel rate.

The Pavillon is quite nicely situated for the metro and buses, and very close to the Promenade Plantée (you can look for kerouac's thread and link to photos of it), and the Marché Aligre. I used to stay a little further out along the Rue du Faubourg St Antoine, and this is indeed more "local", the kind of area where ordinary people live, much of it perhaps more functional than ooozing charm (I notice on Google Streetview a fair number of small businesses like plumbers, printers and the like), but there seems to be plenty of choice of neighbourhood restaurants within a few steps, and much more, the nearer you get to Bastille. The only thing that would make me hesitate is that the hotel's a bit more than my price range, but I'm a cheapskate: the area is perfectly OK.

Thanks to you all for your suggestions! We will be in Paris for 5 nights. Grasshopper, we work in the hotel industry and love staying in hotels. If we were going to be there longer, we would certainly consider an apartment.

The Gare de Lyon area is fine, and there are lots of nice restaurants and markets and local shops. Good transportation connections by bus and metro.

I used to place much more importance on what neighborhood I wanted to stay in, but having stayed in several, I think they all have their own charms.

Just in case anyone else has a similar question, we just got back from our stay in the 12th (near Place de Bastille), and we LOVED it. The neighborhood had a much more local feel, and we were within 15 metro ride minutes of anywhere we wanted to go. Plenty of shops cafes and bakeries, as well as the two open air markets (Marche de Bastille and Marche de Aligre). We will definitely choose that area when we travel again.

I don't know if the 12th is "better". It is more vibrant and fun and where I'd like to stay.
But the 7th is quite posh and sedate, and there are plenty of folks who are very happy with that.
I believe both areas are teaming with public schools, so both are very local. Lots of immigrants in both areas, just from different parts of the planet.

I have stayed in both and prefer the 7th. I think the transport accessibility is better and particularly the buses.

I would definitely choose the 12th.