I don't know where exactly Cuzco Hotel is, but Asador Donostiarra is not far of Cuzco square, I don't know exactly the address. Their specialities are meat and fish grilled.
About 5000 ptas/person.
Also close to Pza Castilla is Mesón Gallego in Plaza de la Remonta, same price, very good meat, fish and seafood.
Cheaper is Pizza Jardin, italian food, in Pensamiento st., also close to Cuzco sq.
There are plenty of good restaurants in streets close to Cuzco sq. but I cannot remember more now, sorry.