As usual, you are right, Sagres, here I am!!!!!!
Ntepek,
I have stayed in the hotel Vila Gale Tavira and it is excellent and really close to the centre, although it is in a quiet street. We went B&B in January and got an excellent deal with alpharooms.
The hotel is first class and the buffet breakfast was great.
Another consideration is the hotel Porta Nova. I had friends who stayed there and they said it was excellent too. The only drawback is it is up a hill and just a lttle further away (depends on your mobility), but still a good option through alpharooms too.
As for eating......a lot of the restaurants close at that time of the year but you will still have a fair choice.
For the wife's birthday, I would suggest the Nora Velha which is slightly on the outskirts of the town but you could get a taxi for less than 5 euros (maybe only 3) as it is not too far. The food there is lovely especially the fish and the surroundings are nice.
There are lots of other nice restaurants and you might like to try the hotel restaurant?
If you want a nice meal, I know a couple of places that are basic but the food is good and cheap too!!!
The Belafria is opposite the bus station and is run by Portuguese friends of mine. They have been talking about giving it up but am not sure if they have done so yet. (closed on Sundays)
I can't remember the names of these other 2 but I will try to give you directions (they were open last Jan) and are basic but homemade Portuguese food too.
From the main square gardens, if you walk along the side of the river (don't cross it) past the indoor shops and restaurants, you will see some restaurants on the oppoite side of the road. I think it is the 2nd or 3rd last restaurant. (look at the menu outside in the case'cos it's the only one that has turkey steaks with cream.....hubby's favourite)
The other is at the new pedestrian bit with the fountain, cross over the river via the pedestrian bridge. At the end of the bridge you will see an archway on the left, go through it and there is a restaurant entrance on the right......you have to go upstairs to get into it. Look out for their prato do dia (dish of the day) usually tremendous value!!!!
Hope this helps a little but if you want to know anything else, just ask.
Pat
P.S. how long are you going for and are you driving/touring and want places to see in the area?