The hotels in Tehran are in poor condition and most haven't been renovated since the fall of the Shah. Service is poor, the food, especially the kebabs are good.
Tehran is good for shopping but not much else. You could go to the surrounding areas of the capital to sit in nature and have a mix of tea, nuts and dried fruits as many Iranians do.
Isfahan is beautiful, the architecture amazing. There's a magical hotel there, the Hotel Abbasi with all its walls and ceilings carved and decorated in Persian style. It's like going back in time. Unfortunately so is service in most of the country.
If you're not looking for a Leading Hotels of the World experience and are prepared to endure and explore it'll be an enjoyable experience.
Haggle hard at the bazaars!