Hotels in the Greater San Juan Metropolitan area are mainly located in three different sections: Isla Verde (officially located in Carolina, where the airport is), Condado and Old San Juan. Isla Verde has two of the best hotels (Hotel San Juan and the Ritz-Carlton), but there is not a whole lot to do in the area. The benefits of staying in Old San Juan is that you can do a lot without having to rent a car or take a taxi as everything in the Old San Juan area is within walking distance. However, there are very few hotels in Old San Juan. I would recommend El Convento or the Sheraton. Condado is probably the best place to stay as there are a lot of restaurants in the area, which is walkable, and most hotels are on the beach (although the Condado beaches are certainly not the best in PR, but not bad either). In Condado I woudl recommend the Conrad, La Concha (a Renaissance Hotel) or the Marriott. Also, the new Vanderbilt Hotel, which is supposed to be outstanding, should be open by next November.
My recommendation would be to stay for a couple of days in San Juan and then for a few more days in one of the resorts outside of San Juan on the eastern part of the Island (El Conquistador, St. Regis, Wyndham Riomar) or in the islands of Culebra (Costa Bonita) and Vieques (W Hotel). Both Vieques and Culebra have beaches recognized as some of the world's best.