Recommend that you stay on the Lido at the Hotel Belvedere. Prices are better and its a nice change of pace from Venice. You'll find several good restaurants. The Lido is a 15 minute ride from San Marco.
The Lido is great, but be prepared for frequent and rather costly trips to and from the Island to the City. Don't miss visiting the Caffe Florian in St. Marks... preferably late in the evening after dinner! It is remarkable!