Lisbon has an excellent range of accommodations serving just about every market niche, from luxury pads downtown to workaday, business-oriented hotels out at the former Expo site, Parque das Nações. Even in the city's hotels, consider inspecting a room before taking it: street noise can be a problem, and, conversely, quieter rooms at the back don't always have great views (or, indeed, any views).
Also, some hotels charge the same rate for each of their rooms, so by checking out a couple you might be able to get a better room for the same price. This is especially true of the older hotels and inns, where no two rooms are exactly alike.
Lisbon is busy year-round, so it's best to secure a room in advance of your trip. Peak periods are Easter and June–September; budget pensões are particularly busy in summer. Despite the high year-round occupancy, substantial discounts—sometimes 30% to 40%—abound from November through February.