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Mark

I do think the Karawan is probably your best choice from reports I've read as it is very well placed. I've stayed in Sousse Palace which is well situated but I don't think it is A/I and, although listed as 4*, doesn't really come up to scratch in some ways, particularly regarding food and general ambience. A lot of the other 4* hotels are a bit further out of the centre if you want easy access to trains, buses and the Medina.

At the end of the Corniche (the street of Karawan) is the Riadh Palms Hotel (I heard with Russians) and opposit that is the Tej Marhaba, (no Russians), both do A-I. only 1 km from town centre.
Personally I would go for the Tej Marhaba.
Inbetween these hotels is the El Hana, but I wouldn't recommend that.

gert-jan