It was a tough choice to make, given the numerous hotels dotting along the perimeter of Sun Moon Lake (日月潭)... from the most budget to the most luxurious. After reading reviews after reviews and taking into consideration the balance between our budget, the comfort and the location, we decided to book Spa Home Hotel. It is a newly built boutique hotel and the reception lady said that all the rooms are facing the lake. (Google Map street view shows the hotel still under-construction, as of November 2009.) The hotel only has a few floors and does not have a lift. When checking in to our room on the second floor, we had to conquer the stairs with our heavy luggages. But overall, it's a nice and cozy hotel with big spacious room.
The bathroom, however, wasn't very much to my liking. The standing shower area is tiny and dim (tucked in the left corner of the bathroom).
The next morning, we wake up to a foggy view of the lake and watch it clear up as the sun rises.
We stayed for two nights here and had our breakfast and dinner at the hotel. After a long day exploring as many attractions as we could, we have no more energy to hunt for dinner place. Just to add, the hotel's dining area is also facing the lake, but it's pitch dark at night, so we could only enjoy the view during breakfast.