This was our third visit to Cortona, but the first time we stayed in town (two nights). At the top of the steep Via Guelfa, it has such an elegant ambience. The public rooms are lovely, and our room was charming with its canopied bed. Breakfast buffet was ample and varied. You step out the door, walk a dozen steps to your right and you're in the main piazza. We sat on the steps of the old city hall there and watched the local passagietta through sundown. One of the things you go to Italy for!
The hotel offers parking in an adjacent garage, but be advised - its a very steep run-up in first gear through pedestrians to get to it. Too intimidating for me, but others handle it just fine. Alternative: dropping off passengers and their luggage at Piazza Garibaldi for a couple hundred meter flat walk along Via Nazionale (the only flat street) to the San Michele while you go back down to park along city wall in lot at base of Via Guelfa. Then you get to walk up. People who live here definitely develop legs of titanium! But it's so beautiful.

We stayed at the Hotel San Michele for 3 nights in October 2011. Considering its location; only 50 yards from the main piaza and the quality of the rooms I thought it was excellent value. The rooms are large by Italian standards and because the hotel is old it had an fantastic atmosphere. All the hotel staff where extremely helpfull and friendly. If you are looking for value and friendlyness you cant go much wrong here.
Unless you get a room on the top floor you are unlikely to get a view out of your window like the one on thier website
If you are British I would reccommend you try the "Bar 500" in the main street The owner is British and although the food doesnt look good in the window when it is served with all the trimming it looks and tastes wonderfull and great value too.
only 2 minor points against it: Breakfast was only adequate and the same each morning. The high price of internet or wifi access.

My wife and I and other friends stayed here for 3 nights in August. We thought it was good value and it's very centrally located just off the main square in the old hill town of Cortona. The room was large and well appointed, with a large bathroom. The breakfast was adequate - not amazing. The staff were all very helpful. Despite being deceptively large, the San Michele retains a charming, somewhat "shabby chic" elegance. Definitely a good choice. Note that if you have a car, the hotel offers parking at a price but there is a large, free carpark just outside the old town walls (about a 5 minute walk from the hotel) which was busy and seemed perfectly safe.

The suite for three persons with balcony (beautiful view over the valey) was great and the brekfast was very good as well