The Sunset Cave is a fantastic place to stay. It is atop the hill in the Graça neighborhood with spectacular views. The Alfama is nearby, so this place is perfect for the traveler who would like to wander in it's streets. The metro is also within walking distance, about a 7-10min walk.
Lubica and Tim are amazing hosts. They respond very quickly and are incredibly nice. They also do a good job keeping the place very clean. Highly recommend!