Cosmos is a good choice. Located right on the Mall road, overlooking the posh Claridges hotel, it is a comfy well-in-budget hotel.
Not many know of the Grand Hotel, since it is open only to government employees and their families/friends. The guest house was originally William Bentick's castle, and is situated on the highest point of Shimla. In case you know someone employed with Indian govt., you are in for a treat. Not sure if they have opened it to the public yet.
The rents are dirt cheap. The place is grand. almost 6 years ago