I have stayed at the Pioneer Square Hotel on a few occasions. I have also stayed at several of the hotels that others are recommending (Alexis, etc.).
This is not a Sheraton-Hilton-W-Marriott type hotel. It is more of a boutique facility. I found the rooms clean, the staff helpful and the area safe. Some of the rooms overlooking Yesler have balconies. However, these rooms can be a bit noisy. The inner rooms tend to be quieter but smaller. There s a free continental breakfast.
There are those that think the crime rate is higher in the Pioneer Square area than other parts of downtown Seattle. I pulled the crime stats for Seattle by zip code (Pioneer Square is 98104). There appears to be some elevation in auto theft for the area but all of crimes against person stats were equal to or lower than other downtown zip codes.
Even though I live in Florida, I had an office on 1st Ave and then Main Street in Pioneer Square for almost 10 years. I also had a loft on the same block that the Pioneer Square hotel is located. There are probably more homeless in the area than others. Additionally, due the clubs in the area, it can be a bit rowdy as the night progresses.