Toledo Spain is a medieval, walled city in Castilla La Mancha, perched upon a geographical mound and edged on one side by the Tagus River (called "Río Tajo" in Spanish). While many of the Toledo's streets are driveable, a number of them are too narrow for cars. The best way to see Toledo's sights is on foot - this way you'll better feel the charm of old Toledo. If you're onfoot, prepare for quite a hike and many hours spent making lots of twists, turns, going up and down steep hills. But if you'd like to go from one side of Toledo to the other and don't want to walk you should have no trouble finding a taxi to take you.
IMPORTANT NOTE: If you have the notion to see the often photographed Toledo panoramic from the terrace of the Toledo Parador, BE ADVISED that THIS is a LONG walk and a difficult hike from the city of Toledo. You may prefer to take a taxi. I walked this route once and it took about an hour. I was nearly exhausted upon arrival. But the views of Toledo from there WAS absolutely spectacular and a great place to relax with a drink and a snack. If this is where you finish your day, it's about a 15-minute taxi ride (or less) to the Bus/Train station (the taxi circumvents the city).
During the day, Toledo is absolutely FULL of tourists gathering every bit of medieval history they can absorb, all waiting in long lines for museums, cathedrals, churches, and other popular touristic sights. Toledo takes on a rather different character after the last buses and trains leave for Madrid, carrying their day-trippers back to their home base. It's at this time that Toledo becomes calm, mostly inhabitated only by "Toledanos" and a handful of tourists walking the streets, having a drink at one of the many outdoor cafés. Its relative peace and calm by night greatly contrasts the busy, tourist-filled streets by day.
Below, I've compiled a fairly extensive collection of Hotels in Toledo which have websites. One can read reviews and recommendations of several of Toledo's lodgings in the "Hostels & Other Lodgings" forum of MadridMan's ALL SPAIN Message Board. One should consider choosing a location somewhere inside the medieval walls of Toledo's old city center, somewhere near the Cathedral or Plaza de Zocodover, the old center of town, "casco antiguo", around the Alcázar, or near the Puerta de Bisagra. Staying INSIDE the walls of Toledo will likely give you a very different "feel" of Toledo than if you stay OUTSIDE the walls. Only you can deside which location best fits your needs. Wherever you stay in Toledo the experience will likely change you forever.