Villa Sassa is not the most luxurious hotel in Lugano, if one looks at the number of stars, but in my opinion is definitely the best choice.
The position is unparalleled: it features great views on the lake and on the mountains, still remaining within walking distance from downtown; this also means rooms are usually very quiet (ask for those with bedrooms facing the inner side). Hotels along the lake, on the opposite, may be very noisy, as they are close to the city's main street.
Rooms are huge, with separate bedroom (one or two), living room and kitchen (this applies to rooms 200 and above), nicely furnished and with great views. Principe Leopoldos', a five star facility belonging to the same owners, features similar rooms in terms of luxury (although with a more traditional style), but is farther from town and way more expensive (plus: do not go to their residence, unless you need to attend to a congress in that location).
Villa Sassa features a faboulous fitness center and spa, one you might compare to the club you attend to in your own town, a gourmet restaurant (one of my favourites in Lugano) and an easy going bar also serving lunch and dinner.
The service is very attentive and professional.
Just one advice: ask the staff to replace the standard pillow!