We went a couple summers ago. It's absolutely beautiful. We had a great time, though I think we found that the Durango/Gunnsion vibe is a little more our speed.
Found a lot of these places with help from the old board (thanks a lot, Kevin): Siam Thai: Fantastic food, cool spot. One highlight was a bluegrass band playing Marty Robbins' Big Iron on the porch of a Thai restaurant. Brown Dog Pizza: Lived up to its billing. Great place, nice beer selection. Smuggler's Brew Pub: Good, but nothing to really distinguish itself from any of the other billion brewpubs in Colorado IMO. Chop House: Didn't get to go here, as no reservations were available while we were there, but it's supposed to be good. Butcher & Baker Cafe: This place was hyped up everywhere, but this was the worst restaurant experience I had in Colorado. Smug, pretentious, and insistent upon itself, from the way you order to the service which couldn't be bothered to help. And how the fuck does a place with Butcher in the name make it so hard to get some fucking bacon??? Hard pass. Telluride Brewing Company isn't in town proper and thus not walkable, but had really great brews. Didn't see any food.
We stayed at the Hotel Telluride, which was very cool. They had a gorgeous lobby, and it was a great place to hang out in the evening. They usually had someone playing music, and my boys had a blast playing chess in front of the huge fireplace while dad enjoyed a beer from the bar.
We also rented a jeep from Colorado 145. Hadn't done that before, but it was a great experience. We drove up to Bridal Veil falls and did Imogene pass. My boys had a blast.
If you decide to drive around to Ouray/Silverton/etc., one cool thing we found was the Old Hundred Mine Tour, staffed by former miners who have some cool stories to tell.
Enjoy your trip!