Hi Byrnsey,
I've stayed in the Intur Palacio San Martin many times over the last few years and it's really lovely. It's in a quiet square just next to the main pedestrian shopping area off Puerto Sol, so it would be ideal for a shopping trip. There's plenty bars and restaurants around there and it's about a 5 minute walk as well to Plaza Mayor.
Their own site offers prices just as good as any of the hotel booking sites. Should be about 125-135 euro per night plus taxes.
Hope this helps,
JT.