Hotel Isla de Baños is located in a quiet neighborhood on the outskirts of Baños, surrounded by a tropical garden with a waterfall. The hotel has a good Argentine restaurant (closed on Mondays and Tuesdays) and a nice spa. There are 26 rooms in total, both standard rooms and suites The staff is very friendly and helpful. There is a laundry service and you can rent bikes.
For more info see www.isladebanios.com