I can highly recommend the Linos Inn in Kakopetria, north of Troodos square (on the B9 road). It's situated in the old quarter of Kakopetria - the word "kakopetria" means "ugly stone" and this hotel is on a cobbled stone street with tons of charm and character.
The hotel is not the cheapest in the Troodos but it is warm and cosy, rooms have antique furniture and four poster beds and underfloor heating (great in the winter months). The hotel is a series of renovated houses with wooden beams and old fashioned mud/straw bricks.
It is very popular so book early to make sure of a room.
Alternatively, the Mill in Kakopetria is another good choice and there are also some nice hotels in Platres, the main town in Troodos. Try the Pendeli hotel or, the hotel that invented the Brandy Sour - the Forest Park
You can find details of these hotels on my Troodos hotels page.
