Hi
Recently stayed 4 nights in the Sofitel Le Castille in Rue de Cambon which is in the 1st. The hotel has rooms up to duplex suites and the beds were out of this world. Hotel has a renowned Itailian restaurant, Il Cortile, although we didn't eat there. Breakfasts were fine but hot choice limited to omelettes or bacon & egg. Hotel has less than 50 rooms.
Had lunch in the Intercontinental on Rue de Rivoli (again in the 1st)and this looked impressive - however probably doesn't meet your small hotel criteria
In the immediate vicinity are Jardin de Tuilleries, Vendome, Madeleine, Place de La Concorde, Musay D'Orsay, The Louvre, L'Opera, the Champs Elysee and some very classy shops. It's about a ten-fifteen minute walk to the Arc De Triomphe. You can get on the Batobus (water bus on the Seine - 2 day pass for about Û18) at either the Champs Elysee, Louvre or Musee D'Orsay stops which also calls at the Eiffel Tower, Notre Dame, Isle de La Cite amongst others.
Hope this helps