If you are interested in a lively city with great food and European ambiance, think of Montreal! I have just spent a couple of days here and have been impressed by the energy of the people. I "know" Montreal - I grew up here but the city has just gotten better and better over the years. Lots of impressive new buildings in the financial centre, more cultural amenities, more festivals.
We stayed at the Auberge Bonaparte in Old Montreal by the harbour. http://www.bonaparte.ca/en/index.html friendly service, nice but small room with a very nicely appointed ensuite bathroom (cheapest offered, $155 CDN with breakfast), great location for Old Montreal attractions near Notre Dame cathedral. We ate in their French restaurant, also recommended. Be cautious about which parking lot you put your car in near the hotel. The north one (Safeway?) has a maximum charge which starts again at 6 am.
This evening we tried a budget option that my sister had recommended, just across the street. Le Bourlingeur offers good value for money - $13.95 CDN for cream of cauliflower soup, aiglefin (haddock?) with rice and salad, walnut cake, coffee). Reasonable house wine by glass or carafe.
Titanic at 445 Rue St-Pierre (open only weekdays, 9-4:30) served me a good soup and Richard a salad. Today we had lunch in the cafeteria of the Montreal Museum of Fine Arts. Good sandwich on sourdough country bread.
The permanent collection of the museum is free (donations) and has some interesting art, particularly Canadian. A good collection of Riopelles including his paint spattered easel.
Last evening we were lucky enough to finish dinner in time to catch the last part of a fireworks show. It was Argentina's night in an international competition. Evidently the competition continues for most of the summer on Wednesday and Saturday evenings. An added feature was the tango orchestra who promised open air dancing (see http://www.tangolibre.qc.ca/ for more information.
Sidewalk portrait painters, buskers, small string ensembles, hawkers, strolling crowds, outdoor cafes - a busy place and not just in Old Montreal. We wandered up St. Lawrence (the Main) yesterday and there were stylish restaurants and shops. We stopped for ice cream on Prince Arthur Street which is pedestrianized and filled with restaurants. We wandered through St-Louis Square and its lovely homes. And the comedy festival is just starting (Juste Pour Rire / Just For Laughs).
Tons more to do and more to explore - St. Joseph's Oratory, a pilgrimage site, the Olympic Village, Botanical Gardens, a Six Flags amusement park, Insectarium, science centre, harbour tours, rafting or jetboats on the Lachine Rapids, caleche (buggy) rides in Old Montreal, Mont-Royal Park designed by Olmstead of Central Park fame, shopping! eating!
There are many other hotel possibilities. Friends highly recommend the Best Western Hotel Europa downtown.