As we will be visiting Katsunuma winery area we have decided to stay in Kamaguchiko.
Any suggestions of 4 -5 star accommodation.

Probably no 5*, maybe not even 4* in Eropean sense.

I see e.g. Fuji Lake Hotel.
http://www.fujilake.co.jp/english/hotel/index.html
(My screen doesnt show images on English pages)
http://www.fujilake.co.jp/index.php

Probably a big hotel with Japanese rooms with futon and Western rooms with beds. Could be comparable to 4*.

Many rooms seem to have private outdoor hot bath and expensive ones has view of the Mt.Fuji.

And if you haven't taken a look yet.

http://www.tripadvisor.com/Hotels-g1...bu-Hotels.html

Sorry no personal knowledge/experience with any.

The reviews for Fuji Lake Hotel. Most recent one is in English by an Australian. Sounds like better than I thought, closer to 5* quality possibly.

http://www.tripadvisor.com/ShowUserR...ure_Chubu.html

We spent a night in Kawaguchiko last month at the Ryokan Konanso and really enjoyed it.
http://www.japaneseguesthouses.com/db/fuji/konanso.htm
Kawaguchiko is a very small town on the shores of Lake Kawaguchi. There are no big name hotels there just a few ryokan, ryokan hotels and business hotels. There is a Nissan rent a car right next to the train station where you can rent a car if interested or there is a local bus service with info at the Kawaguchiko train station which is operated by a private line and not JR btw. If on a JR Pass you would make a switch at Otsuki and pay a supplement to get to Kawaguchiko

Aloha!