We stayed at Eremo Gaudio for two nights during a stay in Varenna. We loved the views from above, but it just didn't compare to staying in town and being within a short walking distance from everything. While this hotel was a 10-15 minute walk to town, keep in mind its quite an uphill walk back (especially when you're pushing a stroller).
This hotel has two buildings. The lower building has the restaurant, the front desk and a number of rooms. The upper building is much more charming -- and you get to ride a funicular to get there -- and has even more spectacular views of Varenna. In all honesty, the lower building seemed like more of a motel, than a charming place to stay in Varenna.