Interesting points - and I agree with both - the problem with the Pera Palace is it is, as you say, quite a place (Agatha Christie wrote one of her novels there) and worth viting if only for afternoon tea but I think it's quite expensive (although that is relative). The Ayasofya is also excellent but, again, on the pricey side. The problem is that Istanbul, in real terms, is split into two areas: the 'old' area with Topkapi. the Blue Mosque, the Grand Bazzar etc and the 'center' area with the Pera Palace, Taksim Square etc. Of course it's really easy to go between the two with public transport or you could stay at both!