Holiday Inn Istanbul City was formerly the Hotel Oclay and the family is still actively involved in the property's operation. It is in a great location on a main thoroughfare, just inside the ancient city walls. There is a tram stop directly in front of the hotel, but we found it to be a nice, safe walk of perhaps a mile and a half to the Grand Bazaar, Blue Mosque, Topkapi Palace, etc. Along the way, you'll pass many places to eat or stop.
As for the hotel itself, we checked out several of the rooms and found all of them to be decent-sized and well-maintained, with mini-bars and windows that open. (You might want to close them at night, since there are two mosques in the immediate area and the morning's first "call to prayer" pierces the air at 5am. We didn't mind that at all, but others may feel differently.)
There is a well-appointed restaurant with a full menu as well as lighter fare available in the lounge-bar area. There is a nice indoor pool area. Housekeeping was excellent. Rates are more reasonable than some of the more monumental hotels in the city; many of which are located across the Golden Horn in the Taksim area.
In addition, the Holiday Inn Istanbul City offers free airport pickup, which should be arranged in advance (you can do it by e-mail.) A taxi back to the airport for an early morning flight was 22 million T.L. (less than US$17 when we visited in March 2004.)
We found this hotel to be an excellent choice; not a luxury property, but certainly first class and better than what we would classify as a typical "tourist-class" offering.