San Francisco seems big to many peoples because they've heard about so many things here, but it's really a small city (49 square miles), and most of the tourist attractions are in a much smaller area than that. I'm always surprised that I can go from Union Square through Chinatown and North Beach to Fisherman's Wharf, all in about a mile and a half. </blockquote>

Where to Stay
Resist the urge to stay outside the city because of lower hotel prices, you'll have to fight traffic and find a parking place and even if you save a few dollars, you'll lose your temper. Instead, skip the rental car and apply the money toward your hotel. Street parking is impossible in most areas and many San Francisco hotels charge over $10 a day for parking. Rent a car for the day when you want to drive around outside the city and return it in the evening. Most car rental companies have pick up locations in the city.
San Francisco areas to stay, in order of my preference:

Union Square: It's centrally located and near the cable car, shopping, and theatres. San Francisco's best hotels are here and they're very expensive, but you can find something within all but the meagerest of budgets if you work at it.

North Beach: There are only a few hotels in North Beach, but there are lots of restaurants and evening entertainment and it's centrally located between Chinatown and Fisherman's Wharf. You can start your day with coffee at a sidewalk cafe here and enjoy the European feel of the place.

Fisherman's Wharf: Most Fisherman's Wharf area hotels are expensive, and there's not much to do here at night. Because it's on the edge of the tourist area, you'll have to travel farther from your hotel to see other areas (and carry all those purchases back with you). There are no hotels right on the waterfront.

Chinatown: There are very few hotels in Chinatown itself. Union Square and North Beach are right next to Chinatown and offer better choices.

Lombard Street: Some renovated motel complexes and pseudo-bed and breakfasts make up most of the lodging here. Some offer free parking. However, most of the tourist attractions are too far away to walk.
Van Ness Avenue/Civic Center: Along Van Ness, you'll find some of the lower-priced chain hotels. Be careful about choosing a place near the Civic Center, especially if you're worried about safety, and ask questions about the surrounding street scene.

Other: San Francisco's Victorian bed and breakfasts cluster around Alamo Square and Golden Gate Park. They're charming, but because they're not centrally located, you'll have to hassle with a car or take a bus or taxi. Any other area in San Francisco is much less convenient, including the airport, so be sure you have a good reason for staying there.