OK, Here's what I can tell you. Fiesta Texas will be quite crowded on the weekends of Spring Break...if you can hit it on a weekday, like a Mon or Tues, it may not be as crowded. We usually get season passes and do the rides before it gets too hot, like March thru June, and the waterpark the rest of the summer. We like SeaWorld ok, but FT seems to have more to do. However, if you can do both, you'll enjoy all the shows at SW.
Hotel...if you can stay downtown then you will certainly be near the action. And you needn't worry about being right on the riverwalk. Just about all hotels downtown have easy access to the downtown trolleys. Our downtown is very compact and easy to get around by foot or on trolley. Last summer we stayed at the Holiday Inn off 35 and Durango for a weekend. My kids absolutely loved it. We were across the street from a trolley pick/up. Although I wouldn't recommend the restaurant at HI, it was an OK room. My DH and I have also stayed at the St. Anthony which is a Crowne Plaza (?) hotel and one of the oldest hotels in the city. It has the best - although pricey - Sunday Brunch I have ever had. It's quite elegant and stately. It's in downtown, but not on the river so the rates can be very reasonable.
Other places I would suggest for a distinct SA flavor would be La Mansion which used to be a school. It is on the riverwalk and expensive, if I remember correctly. I stayed there once for a business meeting years ago and the rooms are absolutely lovely. It has saltillo tile throught the hotel. We've had brunch there for Thanksgiving twice and it's quite good. If you like the Marriot group and are on their rewards program, you might want to consider the Marriot Plaza rather than the other two Marriots that are on the Riverwalk (Marriot Rivercenter and Marriot Riverwalk which are actually directly across the street from one another.) The Marriot Plaza is still right in downtown and a couple of blocks from an entrance to the Riverwalk. We've had a friend stay there and we visited him. This hotel is also charming and unique. It has an awesome courtyard that is landscaped immaculately. There are actually one (or two, I forget) beautiful peacocks that roam the courtyard. Nice fitness center, too. Great pool from what I could tell. It is right next to La Villita. If you have a hotel in mind, let me know and perhaps I can tell you if it's in a desirable location or not.
Food...MY FAVORITE SUBJECT!! Mi Tierra is nice and located in El Mercado which is closer to I-35. However, there is a place just across I-35 called Pico de Gallo. It's pretty good. I think they also have Mariachi's on the weekends. They also serve a great breakfast.
One of my fav's is Rosario's. It is located on Presa St. and St Mary's (I think). It is rather ecletic and artsy. My favorite are the fish tacos which is actually more popular in So. California/Baja area. It's hard to find them locally. My husband really likes the Caldo with Fidello (vermicelli). However, the chicken fajitas are not that spectacular. There is weekend entertainment and always a long wait - the better for sipping their great Margaritas.
Now if you're adventurous and want to veer off the beaten path...take Commerce street from downtown westward. A few blocks before you get to the intersection of W. Commerce and Gen. McMullen, there is a mom and pop restaurant called Lisa's on the left side. There have been several great reviews locally in our paper about this restaurant. It has a varied menu with all the basics, plus great "homestyle" plates such as carne guisada, puerco asado (grilled pork) in a green salsa gravy or a red salsa gravy. Their tortillas are sooo good!! Also, puffy tacos are a SA originals and are the best.
Of course there are the usual tourist traps on the Riverwalk and I really wouldn't recommend any of them to be outstanding food, but probably Rio Rio is best known and pretty decent. It's the restaurant with the colorful umbrella table right on the banks of the river.
Must sees: The Alamo (of course), IMAX is cool, The Rivercenter Mall - pretty nifty. One of my favorite things to take the kids to - Texas Institute of Cultures. It's very kid-friendly, interactive.
Do take advantage of the Via trolleys downtown. They're like 50cents and include transfers. Keep track of which "color" line you're on, because not all colors stop by all major attractions and you may need to transfer.
OK, I'm pumped and ready to go downtown this weekend!! If you have any questions, feel free to email me. We actually just bought another car and decided that besides the Fiesta Texas annual passes, the only other vacation splurge we'll take this summer is another stay downtown.
Vicki Moreno
Buz is right though, good food and a great atmosphere. Not to mention a great mexican bakery right there too 
