Stayed here once in january 2013 and then this past week. The rooms in the main building were just updated with all new floors and bathrooms and are so nice! Also in the older house, all new decor and many new updates to rooms. Looks great.
The rooms are ALWAYS clean, which is important to me.
The location is about 5 minute taxi ride to city center, and 15 minute walk during the day. I've read some reviews about dogs barking, which I have noticed to be MUCH worse in other hotels in Peru.
The top rated hotel in Arequipa, that I've also been to, had similar rooms but no pool, no bar, no restaurant, and no dog (miskol!)... although that hotel is closer to the main square, I felt the street was extremely busy and not as charming as vallecito.
The hotel staff is not as forthcoming as they could be, but if you ask them, they will do ANYTHING you need! Very helpful!
Delicious deserts at the restaurant.