I haven't stayed there, but in November we stayed in a villa that was located at the base of the hill that Ocho Cascadas sits atop. It does indeed look amazing. I'm told it's pretty difficult to trade into that place, but I don't actually have any first hand knowledge of that.
The downsides to the area are that it's in a residential-type section of town, and away from the beaches. It's a $3 cab ride to the old town, and more to the malecon. Walking would be impossible, as the hills are extremely steep. But a $3 cab ride isn't very much, cabs were plentiful, and it was nice to be just outside the action. We absolutely loved our place, and based on the reviews at TUG, Ocho Cascadas is even nicer.