The key decision is not five-star versus four-star. It is how you want to inhabit the city.
Inside the walls
An Old Town hotel puts the city at your door, especially early and late when day traffic falls. The trade-off is pedestrian access, luggage logistics and less resort-style space.
Beyond the walls
Historic residences and cliffside hotels just outside the core can add gardens, pools, sea views and easier vehicle access while keeping the Old Town close.
Choose by rhythm
If your days revolve around walking, restaurants and atmosphere, the Old Town can be worth the compromises. If you want to alternate sightseeing with long hotel hours, look just beyond it.