If you take a look at my screen name, you may realize why I love Minnesota so much! We've been to Ely probably a dozen times, and we have enjoyed every trip. We are campers, both in campgrounds and in the Boundary Water Canoe Area Wildness, so I have limited knowledge of the hotels and cabins in the area. I do have friends who have stayed in the resorts, and I don't think I've ever heard anybody complain loudly. I would stay away from the "bunkhouse" style resort lodging - they can get noisy with excited canoers heading into the wilderness. I've stayed at the Grand Ely Lodge - very nice with rooms overlooking a great lake. Smitty's on Snowbank Lake is also nice. Take a look at the Ely website to see lots of options. Also try to take a canoe trip, even just a day trip on an easy lake. The country is too beautiful not to!
As for Grand Marais, it is a nice place right there on the big lake. I prefer Duluth though - lots of hotels/motels and you get to see the ships coming into the ship canal. If you are driving, make sure you take the time to visit the state parks along the lake shore - the falls and lighthouses are great.
Pam