The Gladstone is my second-favorite place to stay in Toronto (after the posh Le Germain downtown, though one can't always spring for the best!). The rooms are individually themed with amazingly artful decor, and the staff is super-nice and helpful. The bar & cafe on the main level are lovely; both great places to visit even if you live in the city. I highly recommend the apple flapjacks, which are available during brunch on the weekends. They serve great coffee, too.
The surrounding neighborhood of West Queen West is up-and-coming, with tons of interesting shops & restaurants. This is a great place to stay if you're young and looking to have fun in one of the most interesting parts of Toronto.