The Gritti Palace has a prime grand canal location and stunning interiors to match. After the recent refurbishment the interiors are worth a visit alone. I recommend going for supper and eating on their grand canal terrace or spending your life savings on the Redentore Terrazza Suite which includes a fabulous private roof terrace with grand canal views, a plunge pool and exquisite privacy. You can find my other Venice recommendation on my travel rolodex pages.
This hotel is a Venetian institution. It represents pure venetian luxury, which means over the top fabulousness. However be aware the prices match and breakfast can be busy during the summer (as the whole city is).