The restaurant at Palazzo Murat is quite good. It is in a lovely garden that is lit with gaslight candles in the ground. The food is good and the ambience is terrific.

Aranda,

If you will be on the first floor, try to avoid the rooms on the extreme right side as you are looking out to the water, as these rooms have much of the view cut off.

In addition to the hotel restaurant, definitely go to Donna Rosa (a bit pricey) and La Tagliata(less pricey) Also Cafe Positano is an excellent casual choice.

Dominick and his 2 sons are some of the most gracious people you will want to meet.