My top hotel pick, in Fez, is by far the Hotel Palais Jamai. This is a luxury Sofitel hotel in an old palace on the edge of the Medina. It is a wonderful place to stay with beautiful gardens, great rooms and lovely restaurants. It is the perfect place to begin your exploration of the old city.
If you want a smaller riad to stay in or a lovely restaurant to try, go to Palais Sheherazade at 23 Arsat Bennis Douh in the Fes Medina. The setting outside for dinner was really outstanding. I toured many of the rooms and suites. They were all beautifully restored and furnished.