No offense to your friend, Juliana, but The James is not in Chicago's Loop.  You need to be south or east of the Chicago River to be in the Loop, and The James is north of it.  It's off the "Magnificent Mile", in River North, or Northbridge, depending on who you talk to.

Also, according to a friend in the Chicago commercial real estate community, rumor has it that The Blake will close unless a buyer can be found. Said buyer is nowhere to be found, he added, because no one wants to business with the developer trying to sell The Blake.

So since you are Chicago-savvy, what hotel would you recommend for people visiting?

Hotel Burnham, across the street from what was Marshall Field's, is another great Chicago Hotel.

I agree with the poster above, that the Hotel Burnham is an excellent choice, especially if one is an architecture buff.  The hotel was a complete rehab that the City of Chicago sponsored when they were trying to draw businesses to State Street, and I remember what terrible shape the old Reliance Building was in before it became The Burnham: it's amazing how great it is now.  One caveat to this recommendation, however: there is a massive construction project taking place directly accross the street from the hotel, so views overlooking Washington Street are likely to be noisy during the day and less-than-"view-licious" in the evening.

There are a number of hotels that are great in Chicago: my favorite would be the Peninsula, Westin or Park Hyatt for Michigan Avenue; the Sofitel Chicago Water Tower for style and scene; the Hotel Indigo (Gold Coast) for feeling like a posh local (it's in the same neighborhood I live in: alas, I live in a not-so-posh Studio); the InterContinental Chicago for it's amazing pool; and in the summer, The Drake for it's amazing Lake Michigan views and close proximity to Oak Street Beach.  

It's funny, I never really paid much attention to Sofitels but they always rank high in big cities. That said, if anyone wanted to visit Los Angeles I would recommend the Sofitel LA b/c it's been recently renovated to look extremely swank, has a great restaurant (Simon LA), Rande Gerber's Stone Rose lounge, and it's a great location for shopaholics--next to Beverly Center and a few blocks away from Robertson Boulevard. But if you had tons of money to spend, hands down it would be the Beverly Hills Hotel. You just can't beat it.