Hotel Ceballos was the governor's palace. So it is historic and lovely and on the main plaza -- Jardin de Libertad beside the cathedral and across from the archaeological museum. The lobby is modern and the staff speak English. I lived with a family in Colima, but I stayed with my mom and my aunt here when they came to visit me once. It was very affordable to get a two-bedroom unit that three of us easily slept in. Breakfast is not included, but the rooms are gorgeous, very large, and include their own full baths. I believe it was not above $50 for the three of us. They do have a restaurant right off the lobby where I ate several times in addition to breakfast on my stay. Breakfast is affordable there or you can just walk down the street and grab a bite to eat at any stand pastry shop.
It is the best location and the coolest historic place to stay in Colima. There is no air conditioning I might add -- but then again only a few places have it in the whole city like the "mall".