Yes, be ready to walk up some stairs! But you'll appreciate the work out - it will be good training for all the hills of Lisbon.
We stayed for almost 2 weeks and enjoyed everything about our stay. It is very close to the water, to great restaurants, to Alfama ... but it is not in middle of all the commercial noise and international luxury brand shopping (a big plus).
The hosts are very proactive and helpful with plenty of great (and color coded!) suggestions of what to see and do during your stay.