We spent a wonderful week in the Quinta do Vale hotel in August 2013. The hotel is just out of Horta so you need a car but it's worth it for the beautiful peace and quiet, and fantastic views of Pico one way and the Caldeira the other.
The hotel has large airy rooms, a beautiful pool and even a gym and sauna, although the weather was a bit hot while we were there to try these. There is also a games room if the weather turns bad.
The staff were kind and helpful and made us very welcome - including the cat! Breakfast was especially good, with fresh exotic fruits as well as the more traditional cheese, ham and fresh rolls. I also particularly like the Portuguese tradition of cake for breakfast...
It's a family-run hotel, which made for a nice atmosphere. The landlady was very kind and helpful and even tracked down an out-of-the-way restaurant and checked it had veggie food for us.
More generally, Faial is a lovely island, plenty to do even though it's small, with lovely walks, museums, whale-watching and a day-trip to Pico. The botanical garden is just five minutes from the hotel, too.