Melbourne is probably a bit like most major cities Noreen in that downtown is a mixture of business and shopping with a lot of cafes about and a sprinkling of older architecturally significant buildings and a couple of churches.
There have been a couple of areas go through significant redevelopment in recent decades, some still continuing and that's what is referred to as the Southbank precinct on the south bank of the Yarra and the Docklands area to the west of the CBD.
One interesting development right in the CBD is Melbourne Central Shopping Centre and at the heart is an old shot tower with a glass cone built around it.

The city is also well set up for visitors in that there is a free city circle tram that used to circulate just about the true CBD but now has an extended route to include the docklands development area, the route taking you to a lot of historic buildings and parklands areas mainly on eastern fringe.
35 - City Circle (Free Tourist Tram) - Metlink - Your guide to public transport in Melbourne and Victoria
Many of the stops will give you ample walking opportunities, the parklands in the east for instance allowing you to walk past parliament house and old treasurey building [ now Melbourne Museum ] down through treasurey and Fitzroy gardens and on to the MCG and an elevated walkway to take you over the main city access railway lines and on to Tennis Centre and across the Yarra river to the Botanical Gardens [ amongst best anywhere ] and surrounding parkland/gardens.

The heart of the CBD is on the edge of it, the intersection of Flinders St. and Swanston Street having the Flinders Street Railway Station @SW, a egg yolk yellow and famous for " meet me under the clocks " heritage; opposite to NW is Young & Jacksons, also a famous after work drinks meet spot before catching a train and to NE is St Pauls Cathedral with the SE corner having had some controversial developments in its time, currently a love/hate piece of architecture that is one of the National Art Gallery Homes - National Gallery of Victoria and hopefully not closed for too long because of storm damage.

Right at the SE corner and down some steps you'll also find the Melbourne Visitors Centre and a great place to start for maps and other info.
The four city blocks, two north by two west from there house many smaller lanes and shopping arcades in heritage areas and the free city tram runs both ways along Flinders Street.

As for hotel locations, there are many newer and older hotels about the CBD area and you usually pay quite a bit more for newer flasher hotels that to me have little character.
I have stayed at the Victoria Hotel - Melbourne Hotel Accommodation | Victoria Hotel Melbourne and whilst it is very conveniently located we unfortunately had a room with noisy air conditioning ducting outside, so something to be checked for.

If you're looking for somewhere close to the CBD but with a little more greenery about, there are places like
. Flagstaff City Melbourne - Motel, Hotel Accommodation in melbourne city , very close to Flagstaff Gardens on northern fringe of the CBD and the city circle tram runs along Latrobe Street, southern edge of the gardens, Queen Victoria Markets also quite close.
. Book Accommodation in Melbourne Here >> Arden Motel, Arden St., Melbourne, Victoria a little further away to NE in a semi residential area with tram services still handy.
. Not a hotel but a pleasant place to stay all the same might be the Nunnery Guesthouse, I having only used the budget facilities - Welcome to The Nunnery
Location is superb, the Carlton Gardens opposite housing the heritage listed Royal Exhibition Building and Victoria Museum and for a most interesting contrast between the Exhibition Building and modern architecture a walk around the rear of the Museum is a must do.
A nice little pub is across the lane from the Nunnery and a walk down the lane will take you to one of Melbournes main cafes, theatres, pubs and restaurant precincts.

There are plenty of alternatives about on CBD fringe and to the south of the Yarra, hotels in the Southbank precinct which houses Crown Casino being expensive but in the more open areas down towards St. Kilda and over to South Yarra, prices will be better.
A site like Wotif.com: Hotels, Accommodation, Motels, Serviced Apartments, B&B - Online hotel bookings with instant confirmation or Serviced Apartments Melbourne : Accommodation Melbourne will give you some ideas.

I'd suggest that if you're planning on staying in Melbourne for several days you consider not booking a vehicle until the dates you may want to be travelling out of the city a bit or leaving the region for the CBD transport is very good and a vehicle would just be superfluos to need.