We spent five wonderful days and nights in Danubius health spa, and I highly recommend it. The outside of the hotel doesn't look that much, but the interior is beautiful. The highers floors have been completely renovated, and are modern and clean. The room was a bit hot (it was over +30 C outside!), but OK if you left the balcony door open - the air conditioning wasn't efficient enough. Also I advice you to keep the "Don't disturb" -sign on the door if you wan't privacy, the cleaning staff tends to barge in quite a lot ;)
The breakfast buffet is huge! Everything you can ever imagine eating on breakfast, and very delicious as well. There is plenty of staff at all times, and most of them speak english.
The spa facilities are nice, as is the outdoor swimming pool - rare in Budapest hotels. There are a few different warm pools, hot tubs and steam rooms in the spa. The saunas and steam rooms were a bit too cold for a Finn though ;)
The Margit's Island is a must see, even if you don't decide to spend your nights in it. Beautiful gardens, a little zoo, a huge fountain, an outdoor opera house... Amazing! You can listen to opera while having a late night stroll in the paths of the island, and watch the scenery over Donau. Just magical!
It's super easy to get off the island, the buss 26 leaves practically from the door. The public transportation system in Budapest is excellent and cheap - didn't need a taxi once!