We stayed at Cantinho do Ceu in Santa Luzia for four nights in September and loved it. What a gem! There were only two of us but it could easily accommodate more. The house is very charming, has a comfortable kitchen, two bathrooms, laundry room, and a great outside area for cooking, eating, and hanging out.
Fernando was easy to work with, speaks great English, and helped us out in many ways. There was a lovely offering of local wine, cheese, bread when we arrived.
Santa Luzia is outside of Madalena. There is a bus route that goes to Santa Luzia but if you don't want to be bound by times, a rental car makes the most sense. We rented from "Tropical" which is near the supermarket in Madalena. They were really helpful and friendly.
We highly recommend this as a home base for Pico exploration!