Importance of hotel location in Cape Town if you have a car

There are a lot of nice and cosy restaurants, cafes and bars, around long street, so having those within walking distance is rather pleasant. On the other hand, for a South African, 'walking distance' is not much more than 100 meters, most particularly when it's dark, for fear of being a crime victim. And this is not completely unreasonable. You'll find that, even for moving a few blocks, South Africans won't shun taking a car at night.

At the same time, to get pretty much anywhere, you need a car as well.

So, assume you'll be driving anywhere anyway, and find a nice and affordable hotel that's not too far from town. :)

It's Cape Town - if you have a car, you can get anywhere, and you really do want a car. Walking is not recommended. It's one of the nicer cities and warm, so it's a shame, but I'd highly recommend choosing a place where you have safe and ready access to your car to take it to wherever you're going.

Aside from that, last time I was there we stayed in a random hotel a bit out of downtown, and even that location was fine, as we had a car. Plan to drive everywhere, and choose a hotel with good security.

However, aside from the safety and crime aspect (which is seen in most South African cities - not just Cape Town), Cape Town is a fantastic city, and if I ever moved back to South Africa, it'd likely be there.

It's not worth paying more to find a place closer to Long Street. As others have said, you'll want a car (partly because Cape Town is so spread out and geographically interrupted [lots of mountains and valleys], and partly for safety reasons).

There is a lot of street parking near Long Street and in most other areas of Cape Town that have busy nightlife. The V&A Waterfront has a cheap, well-lit parking garage, but most other places I went just had street parking. You'll encounter parking attendants who will give you a price "to stay all night"; I was really skeptical of this and had no idea whether they were officially employed attendants or just some guys looking to make a few bucks. But I think we paid something like 10 Rand for a whole evening of parking near Long St. And our (rental) car was fine.

One thing you might want to consider is what kind of parking your backpackers or hotel will provide. Some places say that they provide parking, but it's street parking (unmetered, just literally parking on the side of the street). We had to park on a steep, narrow road that made me nervous, and it was outside the gate of the backpackers' property so the car wasn't even in sight of our room. We were in a nice neighborhood, so it was fine, but it's worth accounting for. Definitely ask whether "free parking included" means street parking, parking garage, parking in a gated driveway, etc. - and whether they have a security guard.

One other note: South Africa had a lot of confusing traffic rules (for me, anyway). Almost every parking spot is marked on the pavement with a symbol, and the general road guide provided by our rental company (Avis) didn't contain all of them. I found a South Africa rules of the road website that looks pretty comprehensive, so check it out. A lot of the signs denote the type of vehicle allowed to park there or for how long / what time of day. Sometimes these rules are enforced, and sometimes they're not, but it's good to be aware of any possible consequences. :)