Hotel Brascos
Rethymno is a big, noisy city, and the only real tourist attractions there are all within the old city. Hotel Brascos is close to the old city (just about a block south of it), and well within walking distance, but it's situated on a loud and busy intersection. The only reason I stayed there rather than somewhere in the old city is that I got a really good deal on the room through a travel agency (just 33 Euros per night for two people, including breakfast). I believe the normal rate is quite a bit higher than that.
If I ever go back to Rethymno I'll definitely stay somewhere inside the old town because that's where everything is and it's also a lot quieter, but Hotel Brascos was just fine for our short stay. As long as you don't mind the traffic and the short walk to the old town it's a good place to stay.
Unique Quality: The room itself was nothing special, but it was fine, and we really didn't expect much for such a low price. Our air conditioner did not work the first night, but they did fix it before our second night. Otherwise our stay was just fine. The hotel is nicer than I thought it would be, and the breakfast buffet (included in the room price) was outstanding. The breakfast alone made it worth staying there.