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Where to stay in lisbon

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i need help locating a place/neighborhood to stay while in Lisbon (3 nights at the beginning of our trip and 1 night before flying home).

I've got the books (Rick Steves and lonely planet), I've read and researched, but I can't seem to get my head around exactly where would be best to stay.

We plan on dedicating our time in Lisbon to walking, eating, people watching, and relaxing. We will take a guided walking tour of the city our first full day. We May take in a museum or two, at most. We aren't too interested in anything overly touristy (the other stops on our trip include loads of castles, natural parks, museums, etc.). We don't need to be in the busy city center, around lots of noise, but a more centrally located area might be nice as we would like to see as much as possible. We absolutely love food and aren't too concerned about busy night life or bars.

Although for most of her trip we have booked through Airbnb, we wouldn't mind staying at a four or five star hotel while in Lisbon, as we will be booking it with our plane tickets, and getting a discount. With that said, we would prefer to stay in a hotel that feels "Portuguese" ( so, for example, the Hilton is out).

Thanks to all for your thoughts and suggestions!

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