This is my favorite place in town. DH and I used to stay here quite a bit when we would come down for holidays. They have great bfast and meals at the restaurant in the hotel, but they are also right in the thick of things downtown. Walking distance to everything you could want except a grocery store. All the best restaurants are within 6 blocks of the place. Great atmosphere too.

http://www.hoodriverhotel.com/

Other options....

also downtown:

http://www.oakstreethotel.com/

on the waterfront:

http://www.hoodriverinn.com/

If you need more recs let me know. If my house was done I'd be happy to have you two at my place. But alas... the construction continues.