My wife and I stayed at Los MIlagros for 5 nights in late June 2007. Overall, we had a wonderful experience there.
The hotel is small, tastefully decorated, shady, and relaxing. It is a 20-minute walk from Playa Medano and about 10 minutes away from the Marina.
The rooms are basic and very clean. A maid cleaned our room every single day, including the day of our departure.
We booked our room via the hotel's web site. Sandra (the manager) was very prompt in replying to all of our e-mail inquiries. She struck us a very nice person, always willing to help out her guests. Sandra offered help when our luggage got delayed the first day. She booked us a shuttle to the airport on the day of our departure thru a company which minimizes the number of pickups. We ended up the only passengers in the van, so we essentially got a private cab ride at perhaps half the price.
The only drawback I can think of is that the place can be a bit noisy at night. Cabo Wabo, El Squid Roe, and The Giggling Marlin are all 2 blocks away. Plus, tipsy hotel guests loved to park on the lounge chairs outside our room late at night, smoke cigars, and engage in deep (late-night "deep") conversations. However, we always had the option of closing the windows and turning the AC unit on. That drowned out the noise completely.
By the way, make sure you ask Sandra for restaurant recommendations. She kindly referred us to a couple of restaurants, both of which were a block away and off the beaten tourist path, but with outstanding food!
We look forward to our next stay at Los MIlagros.